Previously financial advisor Charles Kulch (Kulch), previously employed by brokerage firm Next Financial Group, INC. has been subject to at least 6 disclosable events. These events include 5 customer complaints, one regulatory event. 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 settled customer complaint with a damage request of $5,000.00 on December 16, 2020.
Alleged unsuitable recommendation of investments in registered, non-traded real estate investment trusts (REITs) between September 2015 to June 2020.
FINRA BrokerCheck shows a settled customer complaint with a damage request of $5,000.00 on October 20, 2020.
Alleged unsuitable recommendation of investments in registered, non-traded real estate investment trusts (REITs) between March 2010 to September 2015.
FINRA BrokerCheck shows a settled customer complaint with a damage request of $5,000.00 on September 08, 2020.
Alleged unsuitable recommendation of investments in registered, non-traded real estate investment trusts (REITs) between August 2012 and February 2016.
FINRA BrokerCheck shows a settled customer complaint on September 02, 2020.
NEXT Financial Group,Inc. Received a complaint filed by an attorney on behalf of the customers alleging sale of unsuitable nontraded REITs during 03/2015-03/2016.
FINRA BrokerCheck shows a settled customer complaint with a damage request of $5,000.00 on August 28, 2020.
Alleged unsuitable recommendation of investments in registered, non-traded real estate investment trusts (REITs) between February 2013 and June 2015.
FINRA BrokerCheck shows a final customer complaint on July 16, 2020.
Kulch over-concentrated customers in illiquid, risky, and high commission products, including non-traded real estate investment trusts and variable annuities. When filing disclosure forms required by his firm, Kulch filed multiple forms simultaneously, and failed to account for the effect of each transaction on subsequent forms.
DDPs feature investment options like non-traded REITs, oil and gas projects, equipment leasing products, and other alternative assets. These alternative investments virtually never profit investors and are almost always unsuitable for investors because of their high fee and cost structure. The extra commissions paid to brokers for selling these inferior investments create misleading incentives, driving an artificial demand for the products.
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. 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.
Kulch has been in the securities industry for more than 26 years. Kulch has been registered as a Broker with Next Financial Group, INC. since 2006.
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.