Advisor Robert Lorente (Lorente), formerly employed by brokerage firm Aurora Securities (Aurora), has been subject to at least two customer complaints during the course of his career. According to a BrokerCheck report the customer complaints concern alternative investments such as direct participation products (DPPs) like business development companies (BDCs), non-traded real estate investment trusts (REITs), oil & gas programs, 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.
In October 2023 a customer complained that Lorente violated the securities laws by alleging that Lorente made unsuitable investments on three REITs purchased in 2019 (February through April). The complaint alleges various claims including negligence, misrepresentation/omission, common law fraud, breach of contract and fiduciary duty. The claim involves a real estate security and alleges $250,000 in damages and is currently pending.
In April 2021 a customer complained that Lorente violated the securities laws by alleging that Lorente engaged in negligence, gross negligence, misrepresentations and omissions, breach of contract relating to investment made in July 2016. The claim involves a real estate security and alleged $35,000 in damages and settled for $12,000.
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.