Securities Lawyers Blog
Previously financial advisor Alvery Bartlett (Bartlett), previously employed by brokerage firm Aegis Capital Corp. has been subject to at least 4 disclosable events. These events include 3 customer complaints, one tax lien. 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 on January 13, 2025.
The claimants allege that the Firm and representative failed to make a suitable recommendation and over-concentrated claimants account in alternative investments and private placements from 2010-2016 . The claimants further allege that the Firm and representative misrepresented the investments and induced the claimant to retain the investment and caused them to suffer a loss.
FINRA BrokerCheck shows a pending customer complaint with a damage request of $2,000,000.00 on June 13, 2024.
The arbitration was filed by multiple claimants that allege the representative recommended an investment strategy consisting exclusively of large concentrations in illiquid, speculative, high commission alternative investments over the course of more than 15 years (approximately 2001-2016) which was misrepresented to them. They further allege the firm failed to conduct due diligence on the alternative investment strategy and failed to supervise the representative’s conduct. One claimant alleges that the representative recommended a private hedge fund that was not properly reviewed and supervised by the firm. After the representative left the firm some of the claimants followed him to his next broker-dealers where they allege the representative continued to represent that many of the investments were still active and could liquidate and return millions to claimants; thus claimants did not know that their portfolios had lost value overall until recently.
FINRA BrokerCheck shows a final customer complaint on June 29, 2023.
It is alleged from September 1, 2020 to September 1, 2022 (‘Relevant Period’), Respondent’s Missouri broker-dealer agent registration was subject to the condition of heightened supervision pursuant to the Commissioner’s authority under Section409.4-412(a). During the relevant period, Respondent received notice of an investor complaint while Respondent’s registration was under the condition of heightened supervision. Registration Section did not receive notice of the complaint per requirements of heightened supervision; did not successfully complete the two-year term of heightened supervision.
FINRA BrokerCheck shows a pending customer complaint with a damage request of $10,000,000.00 on February 23, 2023.
In December 2022, the clients through their attorney sent a complaint letter alleging the alternative investments sold to them from 2006 through 2015 were unsuitable and that the firm did not conduct due diligence in accordance with industry standards. On 2/23/2023, the clients filed a civil litigation regarding specified alternative investments they purchased through the firm alleging violations of 1) Fraudulent Non- Disclosure, 2) Breach of Fiduciary Duty, 3) Breach of Contract, 4) Doctrine of Continuous Advice or Continuum of Negligent Advice, 5) Fraudulent Misrepresentation, 6) Negligent Misrepresentation , 7) Constructive Fraud, 8) Detrimental Reliance, 8) Fraudulent Inducement to hold Investments.
DDPs include products such as non-traded REITs, oil and gas offerings, equipment leasing products, and other alternative investments. Investors almost never benefit from these alternative investments, which are typically inappropriate because of their high fees and expense structure. By offering brokers extra commissions, firms incentivize the sale of poor-quality investments, ultimately leading to a manipulated market driven by artificial demand.
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. Although brokers are required to disclose that non-traded REITs underperform treasuries and come with high risk and illiquidity, they seldom fulfill this obligation. Since investors do not receive extra returns for taking on higher risk and illiquidity, these types of alternative investment products are seldom, if ever, suitable 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.
Bartlett has been in the securities industry for more than 40 years. Bartlett has been registered as a Broker with Aegis Capital Corp. since 2020.
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.