Securities Lawyers Blog
The attorneys at Gana Weinstein LLP are investigating BrokerCheck records reports that Broker John Tarpinian (Tarpinian), previously employed by Paulson Investment Company LLC has been subject to at least 4 disclosable events. These events include 4 customer complaints. According to records kept by The Financial Industry Regulatory Authority (FINRA), Tarpinian’s most recent customer complaint alleges that Tarpinian 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 with a damage request of $342,852.00 on September 16, 2020.
The Claimant’s allege that Mr. Tarpinian made unsuitable recommendations to purchase structured notes.
FINRA BrokerCheck shows a settled customer complaint on May 07, 2020.
Claimants allege unsuitability, common law fraud, breach of contract, negligent supervision, and breach of fiduciary duty from August 2015 through May 2019.
FINRA BrokerCheck shows a settled customer complaint with a damage request of $200,000.00 on May 07, 2020.
Claimants allege unsuitability, common law fraud, breach of contract, negligent supervision, and breach of fiduciary duty from March 2013 through April 2019.
FINRA BrokerCheck shows a settled customer complaint on May 07, 2020.
Claimants allege unsuitability, common law fraud, breach of contract, negligent supervision, and breach of fiduciary duty from February 2013 through March 2019.
Structured products belong to a category of derivative products, which obtain their performance from data linked to the market. The market risk of a structured product is typically linked to an underlying reference. 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 often offer weaker risk/return profiles compared to standard debt or equity investments since the issuing brokerage firms, mainly large banks, seek to earn from the gap between investor payments and the revenue generated from issuing structured notes, minus broker commissions and fees. The intricate nature of these products makes it difficult for most investors to fully comprehend their advantages or calculate the risks and potential returns. Many brokers misrepresent these investments to clients as fixed income or bond like investments with return of capital. The risk of loss in structured products is significantly higher than in corporate debt and other fixed-income options, making them an unsuitable fixed-income alternative.
Recently, firms have begun selling redeemable structured notes often linked to a single investment or a basket of investments. Examples of structured products linked to single securities illustrate the high risks involved without offering meaningful advantages. Our firm examined a structured note tied to Peloton’s stock, offering investors 1.0625% interest per month (12.75% annually), and another note linked to Zillow’s stock, which promised a 12% annual interest paid monthly, provided the stock prices remained above a set threshold. The interest payment would be fully canceled only if both stocks suffered a roughly 40% decline in value. 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.
Tarpinian has been in the securities industry for more than 36 years. Tarpinian has been registered as a Broker with Paulson Investment Company LLC since 2015.
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.