Stephen Williams Subject to Multiple Customer Disputes over REITs and Alternative Investments

shutterstock_172034843-300x200The securities attorneys at Gana Weinstein LLP are investigating claims against Next Financial Group Inc. (Next Financial) broker Stephen Williams (Williams). According to BrokerCheck records, Williams has been subject to six customer complaints, one of which is still pending. The majority of these claims involve the misrepresentation of Real Estate Investment Trusts (REITs).

Most recently, in February 2018, a customer alleged that Williams misrepresented the nature  of various non-traded REITs and didn’t properly disclose the high risk associated with private investments. The customer has requested damages of $350,000. This dispute is currently still pending.

In February 2018, a customer alleged that Williams recommended the customer to invest $50,000 in United Development Funding III (UDF lll) while misrepresenting and failing to disclose UDF III’s highly risky and illiquid nature.  The customer requested $50,000 for damages.

In August 2017, a customer alleged that Williams executed unsuitable sales of non-traded REITS in 2007. The dispute settled at $3,900.

In August 2017, a customer alleged that Williams executed unsuitable sales of five on-traded REITs prior to Williams registration at NEXT Financial Group, LLC. This case settled at $37,500.

Our firm often handles cases involving direct participation products (DPPs), private placements, Non-Traded REITs, and other alternative investments.  These products are almost always unsuitable for middle class investors.  In addition, the brokers who sell them are paid additional commission in order to hype inferior quality investments providing perverse incentives for brokers to sell high risk and low reward investments.

According to studies, non-traded REITs have historically have underperformed 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 only appropriate for a narrow band of investors under certain conditions due to the high costs, illiquidity, and huge redemption charges of the products, if they can be redeemed at all.

However, 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.

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.

Williams has been in the securities industry for 24 years and has been registered with Next Financial since 2007. Previous registrations include the Securities Service Network, Inc., Raymond James Financial Services, Inc., and Edward Jones.

Investors who have suffered losses are encouraged to contact us at (800) 810-4262 for consultation. The investment lawyers at Gana Weinstein LLP represent investors who have suffered investment losses due to allegations of wrongdoing. The majority of these claims may be brought in securities arbitration before FINRA. Our consultations are free of charge and the firm is only compensated if you recover.


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