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Investors in Atel Capital Equipment Fund IX (Atel) may have valid arbitration claims against stockbrokers or investment advisors if advisors’ recommendations of Atel lacked a reasonable basis. Such recommendations by broker-dealers and advisors may be unsuitable, depending on the individual characteristics of investors and whether the broker had a reasonable basis for the recommendation.

Equipment leasing funds, like Atel, allow investors to pool their capital to buy equipment in order to lease the equipment to businesses. These types of investments offer greater risk than traditional stocks and are usually meant for sophisticated investors. Some of the risks investors might encounter are lack of liquidity, price fluctuations due to changes in demand for the leased equipment, and value of the equipment once the lease ends. In addition, if the fund is not able to meet its loan obligations the equipment can be used as collateral. These types of investments are complex and not suited for investors with a low risk tolerance.

Furthermore, some leasing funds are expressly intended to provide tax deferral for certain investors, and may be unsuitable for investors who do not have a need for the tax deferral feature.

According to the Financial Industry Regulatory Authority (FINRA) Newport Coast Securities, Inc. (Newport Coast) broker Lucian D. Hodgman (Hodgman) is being suspended from the financial industry for alleged misleading advertisement and dishonest statements. Hodgman has also faced customer complaints alleging unauthorized trading, unsuitable investments, churning and excessive trading.

Hodgman has been registered with the securities industry since 1991. Hodgman has been employed with Moors & Cabot, Inc. from February of 2001 to September of 2013; Investors Capital Corporation September of 2013 to March of 2014; White Weld & Co. Securities, LLC. September of 2013 to March of 2014; and Newport Coast from October of 2014 to February of 2015.

FINRA alleged that Hodgman caused approximately 40,000 advertisement postcards to be released by a third-party marketing company, without the approval of his firm. The postcards allegedly contained information about investing in fixed annuities that failed to provide a sound basis for evaluating an investment in fixed annuities. Hodgman also allegedly falsely represented to his firm that the marketing company prematurely mailed the postcards without his consent.

Law Office of Christopher J. Gray, P.C. wishes to alert investors to the possibility that recommendations of Direxion ETF (Exchange Traded Fund) Funds (Direxion) by broker-dealers may be unsuitable, depending on the individual characteristics of investors and whether the broker had a reasonable basis for the recommendation.

An ETF fund is similar a mutual fund in that investors pool their resources in order to invest in a higher class of assets. However unlike mutual funds ETF’s are traded throughout the day on exchanges, and fluctuate in price like regular stocks. ETF’s can be a suitable investment for some investors looking for long term returns, but leveraged ETF funds (such as Direxion) are more complex and carry greater risk for investors.

In particular, leveraged ETFs borrow money to make larger bets on the value of their underlying assets, theoretically causing their returns to be greater than gains in the value of the underlying assets, or magnifying losses in the event of losses in value of the underlying assets. Further, many levereaged ETFs have historically failed to track the performance of the underlying assets as inteneded, and the performance of leveraged ETFs as a group has been notably unpredictable.

According to the Financial Industry Regulatory Authority (FINRA) Wisconsin-based Cambridge Investment Research, Inc (Cambridge Investment) broker, Eric Wegner(Wegner), has had five (5) customer complaints made against him. Some of the customer complaints reportedly alleged Wegner made unsuitable investments and/or made false statements concerning investments. Many of the customer complaints dealt with recommendations in private placements such as tenants-in-common (TICs).

Wegner has been registered with the securities industry for fifteen years. From 2002 until 2008, Wegner was registered with Sammons Securities Company, LLC; From 2009 until 2011, he was registered QA3 Financial Corporation; From 2011 until 2013, he was registered with Sigma Financial Corporation; Wegner is currently registered with Cambridge Investment out of Delafield, Wisconsin.

In a 2013 complaint a customer alleged Wegner misrepresented an unsuitable investment and negligently breached his fiduciary duty in connection to a TIC investment sale. The complaint was settled for $250,000. In a complaint filed in 2015 a customer made similar allegations against Wegner in connection with investments in real estate securities. The customer seeks $250,000 in damages in a pending complaint.

According to the Financial Industry Regulatory Authority (FINRA) former J.P. Turner & Company, LLC (J.P. Turner) broker Robert E. Gill (Gill) entered into a Letter of Acceptance, Waiver and Consent (Letter of Acceptance) with the FINRA Department of Enforcement regarding allegations made regarding allegations made against Gill for violation of securities industry rules.

Gill has been registered with the securities industry since 1996. From October 1998 until May 2003, Gill was registered with Grayson Financial LLC. He was registered with J.P. Turner from April 2003 until October 2013.

As a result of entering into the Letter of Acceptance Gill was suspended from the securities industry for 30 days and fined $5,000. Gill allegedly borrowed $100,000 from a customer without notifying his employer at the time, J.P. Turner.

Law Office of Christopher J. Gray wishes to alert investors to the possibility that recommendations of Lightstone Value Plus (Lightstone) real estate investment trusts (REITs) by broker-dealers may be unsuitable, depending on the individual characteristics of investors and whether the broker had a reasonable basis for the recommendation.

Investments in REITs may be unsuitable for customers with low to moderate investment risk tolerances.  Non-traded REITs, like Lightstone, carry greater risk of loss of principal invested than more traditional investments such as stocks and bonds.  Because of the greater risk attached to these investments, they are better suited for sophisticated and institutional investors or for a relatively small proportion of an investor’s portfolio.

Broker-dealers have the duty to conduct proper due  diligence in order to determine if an investment is suitable for a customer.  This includes looking at the investors age, risk tolerance, net worth and investment experience.

According to the Financial Industry Regulatory Authority (FINRA), broker John Schooler (Schooler) has accumulated 26 customer complaints over his career in the securities industry.

Schooler’s customer complaints have reportedly ranged from negligence, fraud, breach of fiduciary duty, misrepresentations to unsuitable investment recommendations.  The customer complaints reportedly alleged unsuitable recommendations of private placements, including high-risk, high-commission investments in oil and gas as well as non-traded REITs, equipment leasing programs and tenancies-in-common (TICs).

Schooler has spent 22 years in the securities industry. From 1994 to July 2011, Schooler was registered with WFP Securities. Schooler has been registered with First Financial Equity Corporation, in Scottsdale, Arizona, since July 2011.

According to the Financial Industry Regulatory Authority (FINRA) Bennett Broad (Broad), a former Oppenheimer & Co., Inc. (Oppenheimer) broker in Pennsylvania, has been barred from acting as a broker or otherwise associating with securities firms.  Broad first began to work in the securities industry in 1979. From 1998 to 2003, Broad was associated with UBS Painewebber, Inc. He also worked for Oppenheimer in 2003 until he was barred in 2015.

Broad reportedly has had 28 customer complaints over the course of his career. The customer complaints ranged from negligence, unsuitable investments, unauthorized trading, and excessive trading to churning. In 2013, Bard reportedly settled with a customer for $131,945 after the customer alleged Broad made excessive, unsuitable, and unauthorized trades. In a more recent complaint pending with FINRA, a customer alleged Broad misrepresented and sold unsuitable investments and churned the customer’s accounts. The customer is seeking $1.8 million in damages.

When a broker recommends that a client purchase or sell a security, the broker must have a reasonable basis for believing that the recommendation is suitable for the investor.  In making this assessment, a broker must consider the investors income and net worth, investment objectives, risk tolerance, and other security holdings.

On October 13, 2015, the Financial Industry Regulatory Authority (FINRA) ordered Santander Securities, LLC to pay $4.3 million in restitution to customers who were solicited to purchase Puerto Rican Municipal Bonds (PRM Bonds). Santander was also fined $2 million for supervisory failures related to sale of PRM Bonds, and an additional $121,000 in restitution to customers

According to FINRA, between December 2012 and October 2013 Santander did not ensure that its proprietary product risk-classification tool accurately reflected market risks of investing in PRM Bonds and failed to adequately supervise its customers’ use of margin and concentrated positions in their accounts.

Additionally, FINRA found Santander failed to reasonably supervise employees trading in its Puerto Rico office with a view toward potential conflicts of interest where customer orders were filled through positions held in their own broker’s personal brokerage account. Because Santander allegedly did not have adequate systems in place, approximately 400 of these types of transactions totaling $500 million went undetected.

On September 9, 2015 the Securities and Exchange Commission (SEC) charged financial advisor Dawn J. Bennett with exaggerating the amount of assets managed by her firm, Bennett Group Financial Services, LLC, as well as the investment returns the firm obtained for investors.

Bennett began working in the securities industry in 1987. From 2006, until 2009, Bennett was registered with Royal Alliance Associates, Inc. From 2009, to the present Bennett has been registered with Western International Securities, Inc.

According to the SEC, Bennett has been inflating her firm’s numbers from at least 2009 to February 2011 in order to lure clients to her new firm. The SEC alleged that Bennett inflated the assets managed by her firm by as much as five (5) times the actual assets managed. Bennett claimed to have $2 billion in assets when in reality her firm managed no more than $407 million at any given time.