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FINRA Still Dealing with TIC Claims Long After Real Estate Collapse

A Tenant in Common, also known as a “TIC,” is described as a way for two or more persons to own property together. Tenants in common may own equal or unequal shares of the property, and there are no rights of survivorship. When one of the co-owners dies, his or her share of the property becomes part of his or her estate and passes on to heirs. This is common in joint business ventures: if two people own an apartment complex and one of them dies, his or her share of the complex passes to their beneficiaries and does not pass to the other co-owner.

TIC exchanges were a popular investment, which were sold mainly through independent broker-dealers, before and during the run-up to the credit crisis and involved tax-deferred exchanges of property ownership interests, with the promise to investors of income generated from the ownership stake in the new property.

Many TIC investors saw their properties fall in value after the real estate bubble burst in 2007-08. Many investors’ current claims stem from the days of the collapse but are only now coming to arbitration because of a combination of factors, attorneys and experts said. Those include a drawn-out process of the decline in value of a commercial property, including the potential for foreclosure, as well as investors’ hopes for a rebound in the value of some properties, writes Bruce Kelly from an article in InvestmentNews.

It was reported that in the 12-month period from May 2012 through April, investors won 17 arbitration awards involving tenant-in-common sales, according to the Securities Arbitration Commentator, which tracks Financial Industry Regulatory Authority Inc. arbitration claims.

Investors continue to win awards over TIC claims. In May, ProEquities Inc. lost a $450,000 arbitration award, plus interest, dating back to February 2003 to a TIC investor who alleged negligence, unfair sales practices and other allegations, according to the FINRA arbitration award. This month, a representative, Victor Cassone, and a defunct broker-dealer, Pacific West Securities Inc., were found liable for $5.1 million to a claimant that alleged breach of contract, negligence and other assertions involving a TIC investment.

Soreide Law Group represents investors nationwide in Tenant-In-Common (TIC) cases before the Financial Industry Regulatory Authority (FINRA). For a free consultation on how to potentially recover your financial losses call: 888-760-6552.

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Pacific West Securities, Inc., a sizable independent broker-dealer with about 290 affiliated reps and advisers, is shutting down due to thin margins and high costs of doing business, with the reps moving to a broker-dealer in Cetera Financial Group, writes Bruce Kelly in a Dec. 6, 2011, ariticle for

Kelly writes that Pacific West Securities Inc. generated $46 million in fees and commission last year and is on track to see $54 million in gross revenue in 2011. The B-D will inform its brokers of the closing, according to Tony Pizelo, CEO. Multi-Financial Securities Corp. has struck a recruitment deal with Pacific West, Mr. Pizelo said.

These two firms are collaborating on how best to move the brokers, Pizelo said. “We anticipate a very enthusiastic response, and expect well over 50% to move,” he said.

High cost of business is pushing firms like Pacific West to the exit, he said. “The margins we are up against are getting thinner and thinner,” he said. “I’m in agreement with Ric Edelman, the model is broken.”

The article states that in October, Mr. Edelman, co-chief executive of the Edelman Financial Group, said the independent broker-dealer channel was “severely flawed” and that independent broker-dealers faced steep economic challenges.

“This is a tough industry right now” for all but the big players, Mr. Pizelo said.

There will be business as usual at the firm for the next couple of months as the brokers move, Mr. Pizelo said, with an anticipated shut down date of March 1.

Multi-Financial Securities, a subsidiary of Cetera Financial Group, said in a news release that it had entered an agreement with Pacific West Financial Group, the broker-dealer’s holding company, to bring over select advisors from Pacific West. The agreement is subject to approval by the Financial Industry Regulatory Authority Inc.

It was noted in the article that dozens of thinly capitalized independent broker-dealers have gone out of business or been sold over the past few years due to the rising tide of litigation costs stemming from investor lawsuits. Most of those complaints stemmed from sales of three products: Medical Capital Holdings Inc. notes, Provident Royalties LLC preferred stock, and real estate deals by DBSI Inc. Mr. Pizelo said Pacific West did not sell any of those products.

Pacific West has been facing increasing legal costs due to customer arbitrations. Over the last two years, the firm has lost Finra arbitration awards totaling $969,000, according to the firm’s profile on Finra BrokerCheck.

Securities Attorney, Lars Soreide, of Soreide Law, PLLC, has represented clients nationwide. If you or a family member have experienced losses with these or other stockbrokers/brokerages, call a Securities Arbitration Lawyer for a free consultation on how to potentially recover your losses. To speak with an attorney, call 888-760-6552, or visit

Soreide Law Group, PLLC., representing investors nationwide before FINRA the Financial Industry Regulatory Authority.

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