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15 Brokerage Firms Subpoenaed Over Alternative Investment Sales
Reportedly, 15 brokerage firms have been subpoenaed by the Commonwealth of Massachusetts as part of an investigation into sales of alternative investments to senior citizens.
The following firms have reportedly been subpoenaed: Merrill Lynch, Morgan Stanley, UBS Securities LLC, Charles Schwab & Co. Inc., Fidelity Brokerage Services LLC, Wells Fargo Advisors, ING Financial Partners Inc., TD Ameritrade Inc., LPL Financial LLC, MML Investor Services LLC, Commonwealth Financial Network, Investors Capital Corp., WFG Investments Inc. and Signator Investors Inc.
According to securities arbitration lawyers, the state sent subpoenas to the firms on July 10, 2013, requesting information regarding the sale of certain products to Massachusetts residents 65 or older over the last year. Nontraditional investments include private placements, hedge funds, oil and gas partnerships, tenant-in-common offerings, and structured products.
The subpoenas reportedly requested the following information related to these investments: The method of review of the sale, commissions generated, training materials, marketing materials and any relevant compliance. The firms have been instructed to respond no later than July 24.
In some cases, the recommendation of alternative investments to seniors with low risk tolerances may be unsuitable. According to investment fraud lawyers, firms have an obligation to fully disclose all the risks of a given investment when making recommendations, and those recommendations must be suitable for the individual investor receiving the recommendation given their age, investment objectives and risk tolerance.
This investigation follows the recent Massachusetts crackdown on improper sales of non-traded REITs, which resulted in over $8 million in restitution to Massachusetts investors paid by six different brokerage firms. According to William F. Galvin, the Massachusetts Secretary of the Commonwealth, the recent investigations into non-traded REIT sales “heightened my concern that the senior marketplace is being targeted for the sales of these high-risk esoteric products.” The fifteen firms that were recently subpoenaed were not parties to the previous restitution payments, and the firms have not been found guilty of any wrongdoing.
About the alternative investments, Galvin stated, “While these products are not unsuitable in and of themselves, they are accidents waiting to happen when they are sold to inexperienced investors by untrained agents who push the products to score… large commissions.”
If you received an unsuitable recommendation to invest in alternative investments, you may be able to recover your losses through securities arbitration. To find out more about your legal rights and options, contact a securities arbitration lawyer at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 for a no-cost, confidential consultation.