Lars Soreide Quoted in "FinancialPlanning" Article Regarding Over-Concentrations of Oil and Gas Stock

Securities Lawyer, Lars Soreide, Esq., of Soreide Law Group, was recently quoted in an article from the New York-based “FinancialPlanning” regarding recent FINRA arbitrations filed on behalf of clients against financial advisor, George Merhoff, Jr., and the firm Cetera Advisors LLC, of Denver, Colorado, for Merhoff allegedly selling oil and gas investments in large concentrations to his clients.
The following blog posts appeared on this website earlier this year regarding George Merhoff:
https://www.securitieslawyer.com/cetera-advisors-george-merhoff/
https://www.securitieslawyer.com/lawsuit-against-george-merhoff/
Excerpts from the article, written by Andrew Welsh for “FinancialPlanning,” published August 2, 2016, appear below:
“Cetera is facing more than $5 million in damages after clients began filing arbitration claims accusing one of the firm's advisers of over-concentrating their portfolios in a handful of energy stocks that cratered in share price when oil prices fell.
Adviser George Merhoff was hit with nine complaints where clients claim they have suffered from $50,000 up to $4.6 million in damages, according to notes filed in his FINRA BrokerCheck record. Four complaints do not list amounts.
Two attorneys representing more than a dozen clients say their portfolios were concentrated in the same oil and gas stocks, such as Linn Energy, which tanked in value as energy prices fell in 2014 and 2015. Clients are seeking damages against both Merhoff and Cetera, which they accuse of negligent supervision and breach of fiduciary duty.
"I don't know how they can defend these cases. He basically put all his clients into one bad idea. It wasn't appropriate for the investors and no one at Cetera was monitoring this," says Lars Soreide, a Pompano Beach, Fla.-based attorney representing four clients in arbitration against Cetera and Merhoff.
Ex-client CM (we are keeping Client's name confidential) says he invested $3.2 million with Merhoff in 2013, following the sale of his share of a business. CM, 42, says he viewed these funds as his path to an early retirement.
"I had always heard that once you have more than a $1 million or more you can live on the interest. So I called him up and said 'How can I live on the interest?'" according to CM, who adds that he did not know Merhoff well.
Merhoff invested $2.1 million into three nontraded REITs, and approximately $1.2 million into a discretionary account that had a 1% management fee, according to CM.
CM says he has no complaint about the REITs, which generated expected dividends – but he charges that the funds in the discretionary account were increasingly over concentrated in energy stocks. By October 2015, the account was comprised 100% of those equities, according to a statement filed in arbitration against Cetera and Merhoff. CM says he asked Merhoff repeatedly about the strategy he was pursuing.
"The reason I didn't flip out sooner is because he said Linn Energy had great financials. I said George, 'Tell me the worst case scenario.' He said the worse case would be that they would go bankrupt, but they'll never go bankrupt. And if they did, they trade at $10 a share, then after all the senior note holders are paid in full, then all the common shareholders will get $10 a share," CM says. "So when it fell to $4, I thought well I'd be crazy to sell it based on what he is telling me."
In July 2014, shares of Linn Energy traded at about $32. At the close of the markets on Friday, shares traded at eight cents a share. CM lost about $625,000, according to claims filed in FINRA arbitration.
Soreide says CM is not alone.
"There were wholesale recommendations across the board. CM may have put in more dollars, but the accounts are nearly identical," Soreide says.
Soreide's arbitration cases are set to be heard next year, he says."
If you were a client of George Merhoff, Jr. with Cetera Advisors of Denver, Colorado, or other broker/dealers, and you experienced devastating losses due to recommendations of high concentrations of oil and gas stocks due to their recommendations, call for a no-cost consultation with an attorney on the possibility of recovering your losses at: 888-760-6552.