Finra arbitrators ordered a brokerage and one of its former registered representatives to pay $1 million to an elderly couple for investments inappropriate investments in private securities.
In an arbitration claim filed in March 2021, Arthur and Edna Sitelman alleged that Independent Financial Group and its then-broker Armando Roman committed fraud, elder abuse, breach of contract and fiduciary duty, and violated state and federal securities laws and Finra rules in relation to investment recommendations involving direct placement programs, according to the Dec. 14 arbitration award. The Sitelmans were the claimants individually and as representatives for Arthur Sitelman IRA, The Good Daughter LLC and Faraway Assets LLC.
Real estate investment trusts were among the private placements related to the cause of action -- Strategic Storage Trust, Inc., Griffin-American Healthcare REIT III Inc., FS KKR Capital Corporation III; American Realty Capital Trust V Inc. American Realty Capital Healthcare II Inc, Walton US Land Fund 3, LP, NorthStar Healthcare Income, CION Investment Corp and Griffin Capital Essential Asset REIT II.
Private placements, which can be risky and opaque, often are cited by state regulators as a cause of investor harm. But some lawmakers and advocates for startup companies are pushing to expand the pool of investors who are eligible to buy unregistered securities, arguing the investors would benefit from private market growth and companies from greater access to capital.
A three-person Financial Industry Regulatory Authority Inc. arbitration panel found Independent Financial Group and Roman jointly and severally liable and ordered them to pay $400,000 in compensatory damages to Arthur Sitelman IRA; $100,000 in compensatory damages to The Good Daughter LLC; and $500,000 in compensatory damages to Faraway Assets LLC. The arbitrators also denied Roman’s request for expungement.
The claimants requested $3.5 million in damages.
A lawyer representing the Sitelmans did not respond to a request for comment. A spokesperson for Independent Financial Group did not respond to request for comment nor did a lawyer representing Roman.
Independent Financial Group has 15 regulatory disclosures on its BrokerCheck profile. Roman is no longer registered as a broker. He is now an investment advisor with Axiom Founders Financial Office, according to his Investment Adviser Public Disclosure record.
“Firm intends to defend claims as without merit,” Roman wrote in a note on his profile regarding the Sitelman arbitration case. “There is no evidence to support the claims or the damages. Investments made were in line with stated objectives, risk tolerance and time horizon.”
A new proposal could end the ban on promoting client reviews in states like California and Connecticut, giving state-registered advisors a level playing field with their SEC-registered peers.
Morningstar research data show improved retirement trajectories for self-directors and allocators placed in managed accounts.
Some in the industry say that more UBS financial advisors this year will be heading for the exits.
The Wall Street giant has blasted data middlemen as digital freeloaders, but tech firms and consumer advocates are pushing back.
Research reveals a 4% year-on-year increase in expenses that one in five Americans, including one-quarter of Gen Xers, say they have not planned for.
Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.
Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.
