There has been a recent series of Financial Industry Regulatory Authority (FINRA) securities arbitration rulings in which panels have sided with investors who sustained losses because of TIC exchanges. TIC, or tenant-in-common, investments involve tax-deferred exchanges of property ownership interests. In the majority of these arbitration awards, the sale of TICs, along with other products, came from DBSI Inc. DBSI raised almost $1 billion from around 140 separate deals prior to its bankruptcy declaration in 2008.
Securities Arbitration Commentator research and InvestmentNews reports indicate that $12.6 million in cases involving DBSI’s direct broker-dealer sales of TICs have been filed with FINRA.
LPL Financial LLC has also faced a FINRA panel because of TIC investments. Heinrich and Araceli Hardt, both 76 from San Diego, California, purchased two TIC exchanges from David Glenn, an LPL broker. According to the Hardts’ allegations, LPL and Glenn’s broker misconduct included elder abuse and securities fraud. On February 10, the FINRA panel awarded the Hardts $1.4 million. Claims were also filed on behalf of the Hardts against Orchard Securities LLC and Meridian Capital Partners. However, the claims against Meridian Capital and Orchard Securities were dismissed by the Hardts in December.
TICs became popular in 2002, following a ruling by the Internal Revenue Service that allowed capital gains to be deferred by investors. In this property ownership, a fractional interest is owned by two or more parties. However, following the real estate crisis, TICs saw a significant decline in value. For more information on TICs, see the previous blog post, “TICs Dangerous for Many Investors.”
If you have suffered significant losses because of TIC investments, you may have a valid securities arbitration claim. Investors should seek to recover their losses through whatever means available to them, including securities arbitration. To find out more about your legal rights and options, contact an investment attorney at The Law Office of Christopher J. Gray at (866) 966-9598 for a no-cost, confidential consultation.