SECURITIES ARBITRATION FILED AGAINST JAMES J. ALBRIGHT, AIG

by Christopher J. Gray on July 21, 2011

in Arbitration,FINRA

On July 5, a securities arbitration claim was filed against James J. Albright Jr. and what was formerly known as AIG Financial Advisors. Claims were made on behalf of eight individuals against Albright and what is now Sagepoint Financial Inc., but more slighted customers are expected to come forward.

Securities Arbitration Filed Against James J. Albright, AIG

The claim states that Albright recommended the purchase of risky, non-traded, illiquid Real Estate Investment Trusts (REITs) to the eight claimants but failed to sufficiently disclose the risks. Inland Western Retail Real Estate Trust, KBS REIT and Behringer Havard are among the unsuitable REITs Albright recommended to his investors. These investments reportedly caused hardships and financial ruin among the investors, including substantial losses and locked assets.

“We believe that tens if not hundreds more of his trusted clients were invested in those REITs, and we anticipate filing many more arbitration actions to seek damages and other relief for them," James Eccleston of Eccleston Law, the firm that filed claim with the Financial Industry Regulatory Authority (FINRA), stated.

The purpose of non-traded REITs is to make it possible for retail investors to participate in larger projects. However, because of their high-risk nature, they often attract new or unknowledgeable investors. Why, then, would a savvy broker like Albright invest his clients’ money in such a risky enterprise? Because broker commission for selling them is high: between 6 and 15 percent.

Risk tolerance, investor age and investment objectives are just a few of the factors that brokers must consider when determining if non-traded REITs are suitable for their client. If not, the broker is responsible for choosing an investment that is. If the investment attorney can prove in arbitration that Albright acted with his own best interest in mind, he will be responsible for damages to his clients. The arbitration could potentially result in a recovery of investment losses and interest, in addition to other relief for claimants.

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