Douglas William Finlay, Jr., a stockbroker formerly associated with Cadaret, Grant & Co., has entered into a Letter of Acceptance Waiver and Consent (AWC) with the Financial Industry Regulatory Authority (FINRA) to settle a case in which FINRA alleged that Finlay over-concentrated a customer’s assets in an unsuitable illiquid real estate investment trust (REIT).
In the AWC, in which Finlay neither admitted nor denied the FINRA charges, FINRA found that Finlay failed to adequately disclose information to the customer about the REIT and also allegedly falsified a firm document that misrepresented the customer’s net worth and income.
As a result of the charges, Finlay’s license was suspended for 18 months. FINRA also fined Finlay $15,000 and ordered him to pay disgorgement of $6,639. The case is FINRA Disciplinary Proceeding No. 2013035576601
Finlay was registered with Cadaret, Grant & Co. from 4/ 1998-12/2013. He is not currently registered as a stockbroker or financial advisor.
Non-traded and private placement real estate investment trusts (REITs) are highly risky products that pose a significant risk that the investor will lose some or all of his initial investment. Non-traded REITs are not listed on a national securities exchange, limiting investors’ ability to sell them after the initial purchase. Such illiquid and risky investments are often better suited for sophisticated and institutional investors, rather than retail investors such as retirees who do not wish to have their money tied up for years, or risk losing a significant portion of their investment.
Brokers and financial advisors are required to make investment recommendations that are consistent with their clients’ risk tolerance, net worth, investment objectives and experience in the market. However, due to the high sales commissions brokers typically earn for selling REITs – as high as 15%- brokers can be tempted to make “one size fits all” recommendations to investors in order to reap commissions. Brokerage firms such as Cadaret, Grant & Co. are required by FINRA rules to supervise brokers and investment advisors- even those who work in independent branch offices- to ensure that the brokers make only suitable recommendations.
If you have suffered significant losses as a result of unsuitable recommedations of REITs or other non-conventional investments by a stockbroker or financial advisor, you may have a valid securities arbitration claim. To find out more about your legal rights and options, contact an investor rights attorney at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or firstname.lastname@example.org for a no-cost, confidential consultation.