Advisor Christopher Shaw (Shaw), currently employed by Pruco Securities LLC (Pruco) and formerly employed by Kalos Capital, Inc. (Kalos) has been subject to at least three customer complaints during the course of his career. According to a BrokerCheck report the customer complaints concerns alternative investments such as direct participation products (DPPs) like business development companies (BDCs), non-traded real estate investment trusts (REITs), oil & gas programs, annuities, and private placements. Shaw runs his securities business through a d/b/a called CJS Wealth Management. The attorneys at Gana Weinstein LLP have represented hundreds of investors who suffered losses caused by these types of high risk, low reward products.
In February 2020 a customer complained that Shaw violated the securities laws by alleging that Shaw engaged in sales practice violations related to engaging in misrepresentations and unsuitable recommendations. The claim alleges $500,000 in damages and is currently pending.
In November 2019 a customer complained that Shaw violated the securities laws by alleging that Shaw engaged in sales practice violations related to breach of fiduciary duty and unsuitable investments. The claim alleges $350,000 in damages and is currently pending.
In July 2019 a customer complained that Shaw violated the securities laws by alleging that Shaw engaged in sales practice violations related to unsuitable investments in alternative securities between November 2012 and May 2017. The claim alleges $450,000 in damages and is currently pending.
DDPs include products such as non-traded REITs, oil and gas offerings, equipment leasing products, and other alternative investments. These alternative investments virtually never profit investors and are almost always unsuitable for investors because of their high fee and cost structure. Brokers selling these products are paid additional commission in order to hype these inferior quality investments providing a perverse incentives to create an artificial market for the investments.
Several studies have confirmed that Non-traded REITs underperform publicly traded REITs with some showing that Non-Traded REITs cannot even beat safe benchmarks, like U.S. treasury bonds. Brokers selling these products must disclose to the investor that non-traded REITs provide lower investment returns than treasuries while being high risk and illiquid – but almost never do. Because investors are not compensated with additional return in exchange for higher risk and illiquidity, these kinds of alternative investment products are rarely, if ever, appropriate for investors.
Brokers have a responsibility treat investors fairly which includes obligations such as making only suitable investments for the client after conducting due diligence. Due diligence includes an investigation into the investment’s properties including its benefits, risks, tax consequences, issuer, history, and other relevant factors. Appropriate due diligence would identify that an alternative investment’s high costs, illiquidity, and conflicts of interests that would make the investment not suitable for investors. Investors often fail to understand that they have lost money until many years after agreeing to the investment. In sum, for all of their costs and risks, investors in these programs are in no way additionally compensated for the loss of liquidity, risks, or cost.
Unfortunately, these types of alternative investment products continue to popular among brokers due to their high commissions. In order to counter the perverse incentives to sell these flawed product many states now limit investors from investing more than 10% of their liquid assets in Non-Traded REITs and BDCs. Many states impose these limitations because these investments do not benefit investors.
Shaw entered the securities industry in 2005. From September 2011 until May 2019 Shaw was registered with Kalos Capital. Since May 2019 Shaw has been registered with Pruco Securities out of the firm’s Belmont, North Carolina office location.
Investors who have suffered losses are encouraged to contact us at (800) 810-4262 for consultation. 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.