Investors in ICON Equipment and Corporate Infrastructure Fund Fourteen, LP (“ICON 14”) may be able to recover investment losses through FINRA arbitration. 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.
ICON 14 is managed by ICON Capital, LLC, and is part of a category of alternative investments that is commonly referred to as an equipment leasing and finance fund. Specifically, ICON 14 is a non-traded, publicly registered equipment finance fund. ICON 14 purportedly makes opportunistic investments in middle market companies by providing financing solutions that are secured by the company’s business-essential equipment as collateral.
ICON 14 was sold to investors beginning in or about 2010 at a per interest price of $1,000. Now, as its process of liquidation continues, ICON 14 interests appear to be worth less than $32.00 each, and investors have lost a substantial portion of their principal invested, even net of distributions.
Some advisors and brokerage firms have reportedly marketed and sold the ICON 14 as a safe means to generate portfolio income that would return principal to investors at maturity. However, under ICON 14’s structure, the distribution payments to investors represented largely a return of the investors’ own principal investment. Based on the nature of the equipment leases and other assets underlying the funds, the overwhelming likelihood from the outset was that there would be very little if any residual value of the assets after the fund was liquidated. This structure was designed to provide a tax benefit to some investors. Based on the foregoing, any advisor who represented that an investor’s principal invested in ICON 14 would be returned in the future either did not understand the fund, or was making a misrepresentation of fact.
Brokerage firms are required to conduct due diligence on investments and to conduct a suitability analysis when recommending securities to a customer that takes into account the customer’s knowledge and experience. FINRA’s suitability rule, Rule 2111, states that “a member or an associated person must have a reasonable basis to believe that a recommended transaction or investment strategy involving a security or securities is suitable for the customer, based on the information obtained through the reasonable diligence of the member or associated person to ascertain the customer’s investment profile. A customer’s investment profile includes, but is not limited to, the customer’s age, other investments, financial situation and needs, tax status, investment objectives, investment experience, investment time horizon, liquidity needs, risk tolerance, and any other information the customer may disclose to the member or associated person in connection with such recommendation.”
Brokerage firms that fail to conduct adequate due diligence on investments they recommend, such as ICON 14, or that make unsuitable recommendations can potentially be held responsible for the customer’s losses in a FINRA arbitration claim.
The attorneys at Law Office of Christopher J. Gray, P.C. have significant experience representing investors in disputes concerning alternative investments, including equipment leasing programs. Investors may contact us via the contact form on this website, by telephone at (866) 966-9598, or by e-mail at firstname.lastname@example.org for a no-cost, confidential consultation. Attorneys at the firm are admitted in New York, New Jersey and various federal courts around the country, and handle cases nationwide (in cooperation with attorneys located in those states if required by applicable rules).