Securities Fraud Attorneys Blog
Chicago-based Stoltmann Law Offices represents investors who’ve suffered losses from alternative investments. Some brokers like to pitch investors on the idea of making a lot of money by investing in alternative investments, mostly because brokers get paid handsome commissions for selling them. GPB Capital and more recently, GWG Holdings are examples of alternative investments that were pushed hard by brokerage firms, with terrible results. There is a sub-category of these investments called “liquid alternative”, which are complex and costly for clients.
FINRA, the U.S. securities industry regulator, recently issued a warning about liquid “alts,” which invest in assets “other than stocks and bonds — such as real estate, commodities and derivatives — to give retail investors exposure to alternative investments in a vehicle that can be traded daily. They are touted as a way to beat market returns but also can be risky and expensive.”
“While these funds may be appropriate for some investors,” the regulator’s warning stated, “FINRA has consistently emphasized the importance of member firms’ sales practice obligations for these and other products, especially when such products may carry additional risks for customers.” These products are inappropriate for investors unless their objective is speculation – plain and simple.
Financial Industry Regulatory Authority (FINRA) records indicate that Clayton, Missouri-based Arete Wealth Management broker Alvery Bartlett has been involved in pending or resolved customer disputes. Mr. Bartlett allegedly misrepresented and recommended unsuitable investments between 2012 and 2014. He also allegedly misrepresented and recommended unsuitable investments in oil and gas securities and tenant-in-common (TIC) interests. These are not suitable for all investors because they can be highly risky and illiquid investments. A broker must take into account a customer’s age, net worth, investment objectives and investment risk tolerance before recommending or selling an investment. If he does not, his brokerage firm may be liable for losses on a contingency fee basis in the FINRA arbitration forum. The firm has a duty to reasonably supervise its brokers while they are registered there.
