The attorneys at Gana Weinstein LLP are investigating BrokerCheck records reports that Broker Garth Lurvey (Lurvey), previously employed by Private Client Services, LLC has been subject to at least one disclosable event. These events include one customer complaint. According to records kept by The Financial Industry Regulatory Authority (FINRA), Lurvey’s most recent customer complaint alleges that Lurvey recommended unsuitable investments in structured products and makes allegations concerning misconduct relating to the handling of the customer’s accounts.
FINRA BrokerCheck shows a settled customer complaint on August 21, 2023.
Customer alleges that during the time period 2017-2022, representative made unsuitable recommendations and untrue representations to the customer regarding a structured note.
The performance of structured products, driven by the market data, are a type of derivative. A structured product generally references a source against which market risk is taken. The source can be a single security, a basket of securities such as a market index, commodities, interest rates, or a real estate loan portfolio. The variety of products that can be structured demonstrates the difficulty in formulating a single unified definition of a structured product.
Structured products typically offer less attractive risk/return profiles than conventional debt or equity investments, as issuing firms—mainly large banks—capitalize on the difference between investor returns and the earnings from issuing structured notes, after subtracting commissions and fees paid to brokers. Given the sophistication of these investments, most investors will be unable to fully understand their benefits or assess the chances of gains and losses. Some brokers inaccurately market these investments as fixed income or bond-like instruments that return capital. Because structured products carry a higher risk of loss compared to corporate debt and other fixed-income investments, they should not typically be recommended as fixed-income alternatives.
Recently, firms have begun selling redeemable structured notes often linked to a single investment or a basket of investments. Structured products connected to individual securities demonstrate significant risk without delivering substantial rewards. We conducted an analysis of a structured note based on Peloton’s stock, guaranteeing investors a 1.0625% monthly return (12.75% annually), and another note tied to Zillow’s stock, which offered 12% annual interest paid in monthly installments as long as the stock prices stayed above a predefined value. Both stocks could lose around 40% of their value before the interest payment would be eliminated entirely. In addition, if the stocks lost more than approximately 40% of their value then the investor would also lose their corresponding principal based upon the performance of the stocks and could lose their entire investment. Further, the notes were callable and could be cancelled by the sponsor.
These products are very high risk and low reward propositions because the investor can only profit at most by 12-12.75% over the course of one year. Even if Peloton or Zillow doubled in value all the investor could achieve would be the interest payment as their profit and none of the price appreciation. Meanwhile the maximum loss is 100% of the investment if the stocks fell severely. Accordingly, the investor takes dramatic downside risks associated with the volatile stocks while having no chance to participate in the success of the stock.
According to newsources, a study revealed that 7.3% of financial advisors had a customer complaint on their record when records from 2005 to 2015 were examined. Brokers must publicly disclose reportable events on their BrokerCheck reports that include customer complaints, IRS tax liens, judgments, investigations, terminations, and criminal cases.
Lurvey has been in the securities industry for more than 21 years. Lurvey has been registered as a Broker with Private Client Services, LLC since 2022.
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.