Currently financial advisor Arnold Mcdonald (Mcdonald), currently employed by brokerage firm Mcdonald Partners LLC has been subject to at least one disclosable event. These events include one customer complaint. According to a BrokerCheck reports most of the recent customer complaints concern either corporate debt securities or 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. The attorneys at Gana Weinstein LLP have represented hundreds of investors who suffered losses caused by these types of high risk, low reward products.
FINRA BrokerCheck shows a pending customer complaint with a damage request of $425,900.00 on February 21, 2024.
Alleged failure to conduct due diligence on a private placement and unsuitability.
Products under DDPs include non-traded REITs, oil and gas offerings, equipment leasing investments, and a range of other alternative financial instruments. Investors almost never benefit from these alternative investments, which are typically inappropriate because of their high fees and expense structure. Brokers earn additional commissions for promoting these low-quality investments, fostering a system of skewed incentives that result in an artificially sustained market.
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. Those selling these products must disclose to investors that non-traded REITs yield lower returns than treasuries and carry significant risk and illiquidity—yet they almost never comply. As investors do not gain extra returns to offset higher risk and illiquidity, these alternative investment products are almost never a good fit for them.
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.
Mcdonald entered the securities industry in 2007. Mcdonald has been registered as a Broker with Mcdonald Partners LLC since 2007.
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.