Securities lawyers are currently investigating claims on behalf of investors whose portfolios held by VSR Financial Services or other brokerage firms contained an unsuitable concentration of alternative investments. Reportedly, VSR Financial Services Inc. is being fined $550,000 by the Financial Industry Regulatory Authority (FINRA) over claims that a reasonable supervisory system was not set up, maintained or enforced regarding non-conventional investment sales.
Reportedly, stipulations in VSR’s written supervisory procedures allowed only up to 50 percent of the exclusive net worth of their clients could be invested in alternative investments, unless there was a justifiable reason for exceeding these guidelines. In addition, VSR’s owner allegedly set up procedures that provided a discount through certain non-conventional instruments that artificially lowered the amount of the customer’s liquid net worth that was invested in non-conventional instruments.
However, the Securities and Exchange Commission stated in a letter to VSR that it had found that adequate written procedures had not been established for the program and this deficiency had not been corrected two years after VSR was notified by the regulator of the problem. The SEC also stated that reasonable actions were not taken to ensure the written supervisory procedures were implemented or, if they were not implemented, to eliminate the discount program.