Monthly Archives: April 2014

FINRA Fines LPL Financial, LLC for Failure to Supervise Alternative Investment Sales

Last month, FINRA hit LPL Financial, LLC with a $950,000 fine for failing to supervise its registered representatives’ sale of alternative investments.  FINRA also ordered LPL to conduct a comprehensive review of its “policies, procedures, and training and remedy failures.”

FINRA determined that between 2008 and 2012, LPL representatives often recommended that their customers concentrate savings in alternative investments such as non-traded REITs, and in doing so, ignored state regulations that impose concentration limits on the sale of such investments, as well as concentration limits specified in the offering documents of certain investments.

Many alternative investments carry with them very high commissions.  As these commissions are paid from offering proceeds (and therefore do not appear on the customers’ brokerage statements), they are not readily apparent to the customers.  These high commissions often impair the entity and make it ultimately difficult for many alternative investments to succeed.  Despite these problems, and despite the fact that many alternative investments sold between 2006 and 2009 have failed, many brokerage firms such as LPL are pushing more of these investments on their customers.  2013 in fact saw more alternative investment sales than any prior year.

Blau & Malmfeldt is a law firm headquartered in Chicago, Illinois that represents investors nationwide in securities, commodity futures, and shareholder rights disputes.  Contact us at 312-443-1600 to learn more about the services that we offer.

 

Criminal Convictions for Former DBSI Executives

This week a federal jury in Idaho convicted four former executives of failed real estate company DBSI, Inc. on various counts including wire fraud and securities fraud.  DBSI was a real estate property investment company that was operated as a Ponzi scheme.  Like so many other Ponzi schemes, DBSI collapsed in 2008 amid sharp declines in the real estate and securities markets.

DBSI President Douglas Swenson was found guilty of 44 counts of securities fraud and 34 counts of wire fraud, Secretaries Jeremy Swenson and David Swenson were convicted of 44 counts of securities fraud, and company attorney Mark Ellison was convicted of 44 counts of securities fraud.

DBSI went into bankruptcy in 2008.  Subsequently, a private action trust was created to pursue claims against various third-parties on behalf of DBSI investors.  Blau & Malmfeldt represented numerous investors in arbitration actions against securities broker-dealer firms that failed to conduct adequate due before selling securities In DBSI and related entities to investors.

Blau & Malmfeldt is a law firm based in Chicago, Illinois that represents investors in securities, commodity futures, and shareholder rights disputes.  Contact us to learn more about the services we offer.