Charles Stevens Subject to Multiple Customer Complaints Over Alternative Investments

shutterstock_66175306-300x225Current D.H. Hill Securities, LLLP (D.H. Hill) broker Charles Stevens (Stevens) has been subject to four customer complaints and five tax liens.  According to a BrokerCheck report many of the complaints concern alternative investments and direct participation products (DPPs) such as non-traded real estate investment trusts (REITs).  The attorneys at Gana Weinstein LLP have extensive experience handling investor losses caused by these types of products.

In addition, Stevens is subject to massive tax liens totaling hundreds of thousands of dollars.  In March 2017 Stevens disclosed a tax lien of over $202,000.  The fact that a broker cannot manage his own personal finances is material information for a client to consider.  In addition, the types of products clients have alleged were unsuitable are high commission products that may be recommended to generate high profits for the advisor at the expense of the client.

In March 2018 a customer filed a complaint alleging unsuitable recommendations, breach of fiduciary duty, negligence, failure to supervise and breach of contract during period of 2012 to 2017.  The client alleged $150,000 in damages and the claim is currently pending.

Our firm often handles cases involving direct participation products, Non-Traded REITs, oil and gas offerings, equipment leasing products, and other alternative investments.  These products are almost always unsuitable for investors.  In addition, the brokers who sell them are paid additional commission in order to hype inferior quality investments which provides a perverse incentives by brokers to create an artificial market for products that no honest advisor would sell.

According to studies, non-traded REITs have historically have under-performed even safe benchmarks, like U.S. treasury bonds – meaning that non-traded REITs provide paltry investment returns considering the risk an investor takes.  Alternative investment products like oil and gas partnerships, REITs, and equipment leasing programs are rarely, if ever, appropriate for investors due to their high costs, illiquidity, high risks, and huge redemption charges of the products, if they can be redeemed at all.  Investors often fail to understand that they have lost money until many years after agreeing to the investment.

Unfortunately, due to the high commissions brokers earn on these products they sell them to investors who cannot profit from them.  These products have become so popular among brokers without providing any benefit to investors that many states now limit investors from investing more than 10% of their liquid assets in Non-Traded REITs.  Many states impose these limitations because its understood that that they provide virtually no benefit to investors in relationship to their risks.

In addition, the number of disclosures with respect to Stevens is high relative to his peers.  According to newsources, only about 7.3% of financial advisors have any type of disclosure event on their records among brokers employed from 2005 to 2015.  Brokers must publicly disclose reportable events on their CRD customer complaints, IRS tax liens, judgments, investigations, and even criminal matters.  However, studies have found that there are fraud hot spots such as certain parts of California, New York or Florida, where the rates of disclosure can reach 18% or higher.  Moreover, according to the New York Times, BrokerCheck may be becoming increasing inaccurate and understate broker misconduct as studies have shown that 96.9% of broker requests to clean their records of complaints are granted.

Stevens entered the securities industry in 1995.  Since June 2006 Stevens has been registered with D.H. Hill out of the firm’s Augustine, Florida office location.

At Gana Weinstein LLP, our attorneys are experienced representing investors who have suffered securities losses due to the mishandling of their accounts.  Claims may be brought in securities arbitration before FINRA.  Our consultations are free of charge and the firm is only compensated if you recover.