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Investor Alert – Steve Case, LPL Financial, and FSC Securities Corporation

Investor Alert – Steve Case, LPL Financial, and FSC Securities Corporation

Investor Alert – Steve Case, LPL Financial, and FSC Securities Corporation

Stockbroker Steve Case of LPL Financial in Bloomfield Hills, Michigan is involved in a legal dispute with a customer who alleges that Case recommended alternative investments, specifically Real Estate Investment Trusts, that were unsuitable for the customer. Case was previously registered with FSC Securities Corporation, and before that with National Planning Corporation.

REITs

A REIT is an investment vehicle that uses pooled investor funds to acquire income-producing real estate or mortgages. In order to maintain REIT status, and the tax benefits that come with it, the trust must return at least 90% of its taxable income to investors on an annual basis.
REITs that do not trade on public exchanges are considered illiquid because opportunities for early redemptions are very limited and because secondary market trading is characterized by low volume, a lack of price continuity, and wide bid-ask spreads.
FINRA has described non-traded REITs as “speculative investments that contain a high degree of risk.” [1] In addition to significant default and liquidity risks, id., the risks of investing in non-traded REITs include high fees (upfront and management); distributions from principal (i.e., return of capital); lack of share value transparency; and, conflicts of interest. [2]

BDCs

BDCs are organized and structured similarly to REITs; however, rather than investing in real estate, BDCs generally invest through subprime loans to “small and developing businesses and financially troubled businesses.” [3]
As with all “non-traded” securities, exit opportunities with respect to non-traded BDCs “may be limited only to periodic share repurchases” by the isser “at high discounts.”[4]
Like non-traded REITs, non-traded BDCs carry a high default risk. Id. They are often compared to venture capital or seed capital investments (but without the accredited investor protections). [5] The Wall Street Journal has described them as “High-Fee, Unlisted, Junk-Based Funds.” [6]

Need Assistance?

If you have suffered investment losses as a result of the malpractice or misconduct of Steve Case, our experienced team of securities attorneys may be able to assist you in recovering some or all of your losses. Call us toll-free at 888-607-4819 for a free consultation or email us through our “Contact” page to schedule a free consultation.

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[1] FINRA Disciplinary Proceeding No. 2013-038283001
[2]https://www.sec.gov/oiea/investor-alerts-bulletins/ib_nontradedreits.html)
[3]https://www.sec.gov/investment/fastanswers/divisionsinvestmentinvcoreg121504htm.html
[4]http://www.finra.org/industry/2013-exam-priorities-letter
[5] SEC Investigation Report, Case No. OIG 496
[6]https://www.wsj.com/articles/these-high-fee-unlisted-junk-based-funds-arent-working-out-1458379803