California Retiree Was Unsuitably Recommended Illiquid, Risky Investments
An elderly Los Angeles investor has filed a Financial Industry Regulatory Authority (FINRA) arbitration claim against FSC Securities Corporation over investment losses suffered. He was unsuitably recommended certain high-risk investments, including Northstar Healthcare Income REIT (also known as Northstar Healthcare REIT) and FS Energy and Power Fund (FSEP). Now, this claimant is seeking up to six figures in damages.
Our REIT lawyers are representing this investor in his FINRA arbitration claim. If you suffered losses and suspect that your FSC Securities broker may have been negligent, please get in touch with SSEK Law Firm today. We can help you explore your legal options.
Claimant Was Unsophisticated FSC Securities Investor Who Wanted Safety, Low Risk
This retiree, who is disabled and suffers from multiple health issues, is an inexperienced investor who did not want to take on undue risks. He entrusted a significant amount of his retirement savings to FSC Securities.
Unfortunately, instead of receiving sound investing advice from his financial advisor, the latter recommended that he invest in high-risk, illiquid products. All the while, the FSC Securities broker misrepresented that these investments were safe for the customer. This older investor then proceeded to lose money.
Northstar Healthcare Income REIT is a public non-traded real estate investment trust. It is set up to originate, acquire, and manage a portfolio of equity and debt investments in the healthcare real estate sector. By July 2021, payments to shareholders were suspended, and its value had plunged by more than 30%. In mid-February 2022, the listing for its share price was $1.41.
FS Energy and Power Fund is a non-traded business development company (BDC) that invests in debt and securities of privately-held US companies involved in power and energy. Unfortunately, market events during 2020, including COVID-19, adversely affected the energy market.
While shares for FS Energy and Power Fund were originally offered for $10/share, by the end of September 2021, its NAV/share was $3.57. Shares were sold on secondary market Central Trade and Transfer for just $1.86/share.
Overconcentration, High Commissions Over Customer’s Best Interests
The FSC Securities broker should never have marketed and sold FS Energy and Power Fund and Northstar Healthcare REIT to this claimant. Instead, they concentrated his account with these investments. Also, both products paid high commissions to broker-dealers and their registered representatives, which may have been an incentive for recommending them to this customer.
In his FINRA arbitration claim, this Los Angeles retiree alleges failure to supervise, unsuitability, breach of contract, breach of fiduciary duty, vicarious liability, misrepresentations and omissions, negligence, and other wrongdoing.
Skilled California Securities Lawyers
Unfortunately, many investors have lost money in Northstar Healthcare Income REIT and FS Energy and Power Fund. If you would like to determine whether you have grounds for a FINRA arbitration claim to pursue damages, please contact our securities lawyers today. In California, call SSEK Law Firm at (619) 550-4847. Throughout the US, call (800) 250-9010 today.