broker/dealer, FSC SECURITIES CORPORATION, which is in the Advisor Group, is facing a multi-million dollar arbitration claim by thirteen investors alleging that three of their brokers made unsuitable recommendations by over-concentrating the clients’ portfolios with high-commission, illiquid alternative investments.
Many of the investors who filed the claim on July 23, 2019, with the Financial Industry Regulatory Authority, Inc. (FINRA) against FSC SECURITIES, were employees of AT&T. The complaint claimed that two FSC SECURITIES brokers in the New Orleans area worked with the retirees who allegedly opted to receive their retirement payouts in a lump sum rather than enrolling in the company’s pension plan. These employees received lump sum payouts upon retirement that were between $300,000 – $600,000. Some of the investments that were allegedly recommended by the brokers were nontraded real estate investment trusts (REITs) and variable annuities.
The complaint stated that there allegedly was a high percentage of the clients’ portfolios placed into high-commission products which may have not been clearly explained to the clients by the brokers at FSC SECURITIES. Nontraded REITS are sold by brokers as an alternative investment and commonly pay commissions to the brokers of around 7%. Variable annuities are also a high commission product and have an approximately 5% – 6% commission. Some of the nontraded REITs which were allegedly recommended by the brokers were American Finance Trust (AFIN) and Phillips Edison. Funds can be illiquid for several years in nontraded REITs and may not be appropriate for a retirement portfolio.
The complaint is also alleging a violation of industry standards of conduct and negligence. The brokers from FSC SECURITIES were not named in the complaint.
Unfortunately, the clients may have given up security and safety when they opted for the lump sum payment and followed the alleged advice of their brokers for these alternative investment products and suffered losses to their retirement.
There could be many retirees who followed the advice of their brokers and placed their retirement funds in high-risk alternative investments. If you’ve experienced losses due to the actions or recommendations of FSC SECURITIES, or any other broker/dealers, contact Soreide Law Group and speak to an experienced securities lawyer at no cost to you regarding the possible recovery of your financial losses through a FINRA arbitration at: 888-760-6552.
Soreide Law Group works on a contingency fee and represents our clients nationwide before FINRA.