The Financial Industry Regulatory Authority has barred ex-LPL Financial (LPLA) representative Gary Chakman over securities industry rule violations related to the sale of non-traded real estate investment trusts. Chackman was registered with the brokerage firm from 2001 until 2012. LPL then ended his registration with the firm for purportedly violating its procedures and policies related to alternative investment sales.
According to the SRO, Chackman “recommended and effected” transactions that were unsuitable in several LPL customer accounts. He did this by overconcentrating clients’ assets in illiquid securities, including REITs. Chackman is also accused of falsifying LPL documents to avoid firm supervision and making the broker-dealer’s records and books inaccurate because he turned in purchase forms misrepresenting clients’ liquid net worth.
FINRA’s settlement letter says that when Chackman submitted falsified documents, this allowed him to increase how much of customers’ accounts could be concentrated in REITs and other investments even though these amounts went over LPL’s allowed allocation limits. The alleged overconcentration took place between January 2009 and February 2012.
Also, according to BrokerCheck, Chackman has settled three arbitration cases for $747,000. Meantime, he is also under investigation by the Securities and Exchange Commission.
Nontrade REITs usually come with a high commission for the registered representative making the sale. In 2013, securities regulators paid greater attention to the sale of these products, which are typically sold through independent brokerage firms. Analysts and bankers say Nontraded REIT sales for this year is expected to hit nearly $200 billion.
While broker-dealers have reached settlements over non-traded REITS-the Massachusetts Securities Division alone settled with six firms for $21.6 billion in client restitution for this year alone-regulator actions against representatives have not been common, despite the fact that FINRA has received complaints accusing these individuals misrepresenting nontraded REITs when making the sales.
Meantime, FINRA is cautioning investors looking to invest in non-traded REITs to get to know this product and the risks involved before putting their money in. Non-traded REITs are not suitable for everyone and you may not be able to handle certain losses should they arise.
At Shepherd Smith Edwards and Kantas, LTD LLP, our nontraded REIT fraud lawyers work with investors to get their money back. Contact us today.
Public Non-Traded REITs-Perform a Careful Review Before Investing, FINRA
In rare move, Finra bars individual rep over nontraded REIT sales, Investment News, December 19, 2013
More Blog Posts:
Securities America, Ameriprise, Among Independent Broker-Dealers Charged $10.75M by Massachusetts for Nontraded REIT Sales, September 4, 2013
LPL Financial Ordered to Pay $7.5M FINRA Fine Over E-Mail Failures, Institutional Investor Securities Blog, May 22, 2013
LPL Financial Continues to Stay On Regulators’ Radar, Stockbroker Fraud Blog, April 10, 2013