Galvin’s Office Files Civil Lawsuit Alleging Overconcentration, Unsuitable Investments
William Galvin, the Secretary of the Commonwealth of Massachusetts, has filed civil charges against former NEXT Financial Group broker, Charles Chester Kulch.
The state is accusing him of selling real estate investment trusts (REITs) and variable annuities (VA) to customers for whom they were unsuitable and overconcentrating their portfolios in these high risk, illiquid investments.
Galvin’s office contends that over five years, Kulch made over $1M in commissions from these transactions. Over 100 investors harmed by Kulch’s alleged actions were Massachusetts residents, including very elderly seniors.
NEXT Financial is a Texas-based brokerage firm owned by Atria Wealth Solutions. Kulch was a broker with the firm from 2006 until last month.
Our stockbroker fraud lawyers at Shepherd Smith Edwards and Kantas (SSEK Law Firm) are speaking with former customers of Charles Kulch who believe he may have sold them unsuitable investments that resulted in their investment losses. Contact us today.
Seniors Over 80 Among Those Sold Risky REITs
According to the Massachusetts complaint, almost 50 of the transactions Charles Kulch executed allegedly violated the broker-dealer’s policies related to overconcentration and the barring of nontraded REIT sales to customers older than 80 years of age. He also allegedly made erroneous calculations related to the percentage of customers’ liquid net worth and did not factor in the reduction in liquid net worth during transactions.
It was last year that brokerage firm paid the Massachusetts Securities Division a $150K fine for its alleged failure to supervise and sales practice violations that included an unidentified broker who, over 10 years, engaged in unsuitable REIT sales.
New Hampshire Investors Also Allegedly Sold Unsuitable REITs
Also around that time, NEXT Financial Group was fined $325K by the New Hampshire Bureau of Securities Regulation over unsuitable REIT recommendations made to 77 of the state’s investors between 2009 and 2016. The allegations are similar to the ones brought by Galvin’s office against Kulch.
As a matter of fact, in 2017 the New Hampshire bureau said it received a complaint from a Massachusetts resident accusing Kulch of unsuitable investment recommendations. Kulch was based out of New Hampshire at the time.
As part of the settlement reached by both states with the brokerage firm, Kulch was to work under “heightened supervision” and barred from selling alternative investments, including REITs.
With 26 years in the industry, Charles Kulch was an Investors Capital Corp. broker from 1996 to 2006 before heading over to NEXT Financial. His BrokerCheck record shows 11 disclosures, including several customer disputes, three of which were settled. All of them allege unsuitability. Two of the claims that were settled for over $120K involved risky, speculative private placements and tenant-in-common interests.
Brokerage Firm Negligence: Failure to Supervise
When a broker violates firm rules and an investor sustains losses, the broker-dealer can be held liable if its failure to properly supervise its representatives allowed the wrongful or negligent actions to occur.
If you suffered losses while ex-stockbroker Charles Kulch or any other broker from the firm handled your portfolio, contact SSEK Law Firm so that our investment fraud lawyers can help you explore your legal options. We work with investors nationwide.