Español Inner

Articles Posted in FINRA Arbitration

Published on:

Investors in First Capital Real Estate Trust (“First Capital”), a publicly registered, non-traded real estate investment trust (formerly known as United Realty Trust) may have FINRA arbitration claims, if their investment was recommended by a financial advisor who lacked a reasonable basis for the recommendation, or if the nature of the investment was misrepresented by the stockbroker or advisor.

Money_REIT-640x401-4-300x188
First Capital REIT’s public offering was active between August 2012 and April 2016, although it has not file a quarterly financial report since the second quarter of 2015, nor has it filed an annual report since 2014.

As the foregoing delinquencies suggest, First Capital has been a slow motion train wreck for over five years.   In a January 2016 Securities and Exchange Commission (“SEC”) filing, the REIT stated that it was not moving forward with a 12-hotel acquisition because the hotel principals could not procure the necessary approvals for the transaction.  In a complaint, the SEC claims that the filing was materially misleading  because the potential transaction was not one that the REIT merely decided “not to move forward with” but instead the transaction allegedly foundered because First Capital’s then-CEO, Suneet Singal (“Singal”), did not actually own certain hotel properties that he had pledge to contribute.

Published on:

Investors in Sila Realty Trust Inc. (“Sila”), a publicly registered, non-traded real estate investment trust (formerly known as Carter Validus Mission Critical REIT II) may have FINRA arbitration claims, if their investment was recommended by a financial advisor who lacked a reasonable basis for the recommendation, or if the nature of the investment was misrepresented by the stockbroker or advisor.

Money_REIT-640x401-1-300x188
Sila recently sent a letter to shareholders recommending they reject an unsolicited tender offer by CMG Partners and its affiliates, CMG Income Fund II LLC, CMG Liquidity Fund LLC and Blue River Capital LLC.  Under the tender offer, CMG is offering to buy up to300,000 shares of Sila stock for $3.57 each.  This price is approximately 59 percent less than the REIT’s most recent net asset value per share of $8.69, announced in December 2020. CMG’s offer expires on July 15, 2021, unless extended.  As well as being much lower than Sila’s estimated NAV per share, CMG’s offer price is also lower than certain reported secondary market transactions, which have reportedly taken place at prices over $6.00 a share during 2021.

Sila  merged with another REIT known as with Carter Validus Mission Critical REIT Inc. in late 2019.  Sila recently announced plans to sell its 29-property data center portfolio to subsidiaries of Mapletree Industrial Trust, a REIT listed on the Singapore Exchange, for more than $1.3 billion. The transaction is expected to be completed in one or more closings during the third quarter of 2021.  As of March 31, 2021, Sila reportedly owned 153 real estate properties, consisting of 29 data centers and 124 healthcare properties located in 70 markets across the United States with a total purchase price of approximately $3.2 billion, including capital expenditures on development properties placed into service.

Published on:

FINRA suspended financial advisor Christian Frank Lucchetto (CRD No. 4648994, hereinafter “Lucchetto”) from the securities industry for three months and fined him $5,000 based on allegations of excessive trading in customer accounts.  According to FINRA, during January 2018 through May 2019,  Lucchetto excessively and unsuitably traded a customer’s account, in violation of FINRA Rules 2111 and 2010.  The conduct allegedly occurred while Lucchetto was employed at First Standard Financial Co. (“First Standard”) in Red Bank, New Jersey.

Money Maze
In 2019, New Jersey securities regulators revoked the broker-dealer registration of First Standard and froze its assets over findings that the firm received revenues of approximately $28.7 million due to unauthorized, unsuitable and excessive trading.  According to New Jersey, the firm, headquartered in Red Bank, N.J., routinely hired agents with a history of customer complaints and regulatory problems.  According to New Jersey, First Standard engaged in unsuitable and frequently unauthorized in-and-out trading in bonds and other securities for which active trading is unsuitable in customer accounts.  New Jersey also found that the firm’s sales commissions were so high that accounts would have had to generate extraordinary returns simply to break even.

According to FINRA Letter of Acceptance, Waiver, and Consent No. 2020065035201l, accessible here lucchetto awc, between January 2018 and May 2019, Mr. Lucchetto, while employed by First Standard, Lucchetto excessively and unsuitably traded a customer’s account.

Published on:

Customers of barred former stockbroker Jeffrey A. Broten (“Broten”), formerly associated with defunct brokerage firm First Standard Financial Co., LLC (“First Standard”) and several other brokerage firms, may have arbitration or other legal claims, notwithstanding First Standard being out of business since 2019 and having declared bankruptcy in 2021.

Piggy Bank in a Cage
In 2019, New Jersey securities regulators revoked the broker-dealer registration of First Standard and froze its assets over findings that the firm received revenues of approximately $28.7 million due to unauthorized, unsuitable and excessive trading.  According to New Jersey, the firm, headquartered in Red Bank, N.J., routinely hired agents with a history of customer complaints and regulatory problems.  According to New Jersey, certain First Standard agents engaged in unsuitable and frequently unauthorized in-and-out trading in bonds and other securities for which active trading is unsuitable in customer accounts.  New Jersey also found that, in some circumstances, the firm’s sales commissions were so high that accounts would have had to generate extraordinary returns simply to break even.

Broten was barred from associating with any Financial Industry Regulatory Authority (FINRA) member firm in any capacity under the terms of a Letter of Acceptance, Waiver and Consent dated October 1, 2020, accessible here. BrotenAWC  The FINRA AWC letter also recites that Broten’s agent registration in the State of New Jersey was revoked under a Summary Denial, Revocation and Penalty Order dated February 6, 2020.  According to Broten’s FINRA BrokerCheck record, the New Jersey authorities alleged that Broten made untrue statements and omitted to state material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading.  New Jersey also charged that Broten engaged in an act, practice or course of business that operated as a fraud, due to engaging in a pattern of excessive, unsuitable and unauthorized trading activity in customer accounts while employed by First Standard.  Broten’s FINRA BrokerCheck report is accessible here. BrotenBrokerCheck

Published on:

Investors may have litigation or arbitration claims against stockbrokers or investment advisers who sold them or placed their funds in Northstar Financial Services (Bermuda)’s Investment products, if the sale was the result of a misleading sales presentation or if the financial advisor’s recommendation to purchase the investment lacked a reasonable basis.

https://i2.wp.com/www.investorlawyers.net/blog/wp-content/uploads/2017/08/15.10.21-bags-of-money.jpg?resize=300%2C213&ssl=1
Investment products sponsored by Northstar Financial Services (Bermuda) include the following:

* Global VIP Elite

Published on:

Investors in private funds formerly managed by defunct Chicago options trading firm LJM Partners, including funds known as LJM Investment Fund LP, LJM Preservation & Growth Fund, LP, LJM Aggressive Fund LP, LJM Fund LP, LJM Master Trading Fund, LP, PEC-LJM Fund LP, and PCF-LJM Preservation & Growth Fund, LP (“LJM Private Funds”) may have litigation or arbitration claims against stockbrokers or investment advisers who sold them or placed their funds in the LJM Private Funds.

money whirlpool
The Commodity Futures Trading Commission and the Securities and Exchange Commission (“SEC”) recently filed litigation against LJM Partners Ltd. alleging the enterprise mismanaged $1 billion in assets by misleading investors about its short options trading strategy and risk management practices.  According to the government lawsuit, LJM Partners unlawfully misled investors for two years about the risk management protocols and “worst case” losses investors could expect from the options trading strategy they employed in  certain commodity pools and private investment funds (as well as in an open-end  mutual fund also managed by LJM Partners, the LJM Preservation and Growth Fund (“LJM Fund”)).

In early February 2018, the LJM Fund dropped more than 80% over the course of just two days during a spike in the volatility index (VIX), losing more than $600 million for investors.  While the losses in the LJM Private Funds varied, the LJM Private Funds also experienced substantial losses during this time frame as a result of utilizing the same general trading strategy.

Published on:

Customers of defunct brokerage firm First Standard Financial Co., LLC (“First Standard”) may have arbitration claims against its former stockbrokers/registered representatives, their former employers, or other persons, notwithstanding First Standard being out of business since 2019 and having declared bankruptcy in 2021.

https://i0.wp.com/www.investorlawyers.net/blog/wp-content/uploads/2017/08/15.10.21-money-on-fire1-1.jpg?resize=222%2C300&ssl=1
In 2019, New Jersey securities regulators revoked the broker-dealer registration of First Standard and froze its assets over findings that the firm received revenues of approximately $28.7 million due to unauthorized, unsuitable and excessive trading.  According to New Jersey, the firm, headquartered in Red Bank, N.J., routinely hired agents with a history of customer complaints and regulatory problems.  According to New Jersey, First Standard engaged in unsuitable and frequently unauthorized in-and-out trading in bonds and other securities for which active trading is unsuitable in customer accounts.  New Jersey also found that the firm’s sales commissions were so high that accounts would have had to generate extraordinary returns simply to break even.  New Jersey’s Summary Revocation Order against First Standard is accessible here. NJ SUMMARY REVOCATION ORDER

In a subsequent lawsuit, New Jersey alleged that First Standard had engaged in a “fraudulent course of business that consisted of excessive, unsuitable, and frequently unauthorized short-term trading in customer accounts that generated commissions for First Standard and its agents at its customers’ expense.”  See Grewal, et ano. v. First Standard Financial Company, LLC, Superior Court of the State of New Jersey, Chancery Division, Essex County Dkt. No. ESX-C-204-4 (accessible here NJ LAWSUIT COMPLAINT).

Published on:

Phillips Edison & Co. (“PECO”), an internally managed real estate investment trust focused on grocery-anchored shopping centers,  recently announced that the REIT’s proposed one-for-four reverse stock split announced last November has apparently been delayed due to “market conditions,” according to filings with the SEC.  The proposed reverse split would have converted every four shares of issued common stock into one share of common stock.

money whirlpool
On March 25, 2021, PECO announced that the REIT is reviewing alternatives in order to provide liquidity to the Company’s stockholders.  Pending this review, PECO’s Dividend Reinvestment Plan (DRIP) has been suspended, beginning with the distribution payable April 1, 2021. Stockholders who would otherwise have elected to purchase via the DRIP will reportedly receive their full distribution ($0.02833333 per share) in cash.

Previously, in 2019, the board suspended standard repurchases under the company’s share repurchase program, but continued repurchases of shares from certain investors who had died or become disabled.

Published on:

New York City REIT (“NYC REIT”) declared a dividend of $0.10 per share on each share of NYC REIT’s Class A common stock and Class B common stock payable on January 15, 2021 to common stockholders of record at the close of business on January 11, 2021.  While the continuing dividends are welcome, they provide modest relief to shareholders whose shares’ value continues to languish, with NYC REIT shares trading at below $10.00 a share during most of 2021.

Money_REIT-640x401-1-300x188
Previously, on November 12, 2020, NYC REIT filed its quarterly report with the SEC, for the period ending September 30, 2020 and reported a net loss per common share of $(0.96), versus a loss of $(0.38) from the third quarter of 2019.  NYC REIT also disclosed that it had only collected 85% of the cash rents due on its portfolio properties, all located in New York City, and stated as follows as to its outlook going forward:  “The negative impacts of the COVID-19 pandemic has caused and may continue to cause certain of our tenants to be unable to make rent payments to us timely, or at all, which has had, and could continue to have, an adverse effect on the amount of cash we receive from our operations and therefore our ability to fund operating expenses and other capital needs, which, beginning in October 2020, include dividends to our common stockholders.”

NYC REIT’s share price has languished since the company listed its shares on the New York Stock Exchange on August 18, 2020.   Based on NYC REIT’s current share price, on a pre-split basis, investors who acquired their NYC shares pre-IPO—when the Company was still structured as a non-traded REIT—have suffered losses of 75% or more of the principal invested.

Published on:

Phillips Edison & Co. (“PECO”), an internally managed real estate investment trust focused on grocery-anchored shopping centers,  recently announced that it has resumed share repurchases upon a stockholder’s death, disability, or incompetency (DDI).  The repurchase price will be equal to the lesser of $5.75 and the company’s most recent estimated net asset value per share of common stock. The REIT’s most recent net asset value per share was $8.75, as of March 31, 2020 (meaning that purchases would be at $5.75 if the estimated NAV per share is not reduced below that price).

Money_REIT-640x401-1-300x188
Previously, in 2019, the board suspended standard repurchases under the company’s share repurchase program, but continued DDI repurchases. In March 2020, the board also suspended DDI repurchases under the share repurchase program.

PECO also will make distributions for January 2021 to stockholders of record at the close of business on January 15, 2021 equal to a monthly amount of $0.02833333 per share, or $0.34 per share annualized.

Contact Information