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Articles Tagged with LPL

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Securities fraud attorneys are investigating claims on behalf of customers who suffered significant losses in non-traded REITs as a result of doing business with Gary Chackman, an LPL Financial broker. In December, the Financial Industry Regulatory Authority barred Chackman for violating securities industry rules related to the sales of non-traded real estate investment trusts.

LPL Broker Barred for Improper Non-traded REIT Sales Customers Could Recover Losses

The alleged misconduct relates to the time period from 2009 to 2012, but Chackman was registered with LPL between 2001 and 2012. In 2012, his registration was terminated by the firm for violating the firm’s policies and procedures regarding alternative investment sales.

According to the letter of acceptance waiver and consent, Chackman “recommended and effected unsuitable transactions in the accounts of at least eight LPL customers, by overconcentrating his customers’ assets in [REITs] and other illiquid securities.” The letter, dated December 12, 2012, also states that by submitting falsified documents, Chackman “was able to increase his customers’ accounts’ concentration in REITs and other alternative investments beyond the allocation limits established by [LPL].”

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Law Office of Christopher J. Gray, P.C., a New York City law firm handling arbitration claims on behalf of investors throughout the United States, has filed multiple Financial Industry Regulatory Authority (“FINRA”) arbitration proceedings on behalf of investors who allege that registered representatives of LPL Financial Holdings, Inc.’s (Nasdaq:LPLA) brokerage subsidiary recommended unsuitable investments in non-traded REITs.

Suitability claims arise when stockbrokers or investment advisors recommend investments that are not appropriate for an investor’s financial circumstances, risk tolerance, or investment goals. FINRA Conduct Rule 2310 requires that Members and their Representatives have a reasonable basis to recommend a transaction or investment strategy suitable for the customer, based on information obtained through reasonable diligence and 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, time horizon, liquidity needs, and risk tolerance.

Cases filed by the Gray Firm allege that in certain circumstances, LPL lacked a reasonable basis to recommend certain non-traded REITs, including Inland Western REIT (now known as Retail Properties of America. As a private unlisted investment, Inland Western was a Non-Conventional Investment (“NCI”). FINRA’s Notice to Members 03 71 states that “since NCIs often have complex terms and features that are not easily understood,” there exists the potential for customer harm or confusion since investors do not understand the risks involved. Members must conduct appropriate due diligence/reasonable basis suitability before offering these investments to the public. Specifically the Notice states that when offering NCI investments, FINRA Members are required to:

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