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FINRA Charges Purshe Kaplan Rep. with $190 Million in Fraudulent NTR and BDC Sales

The Financial Industry Regulatory Authority has charged Gopi Vungarala, a broker at Purshe Kaplan Sterling Investments, with misleading the Saginaw Chippewa Indian Tribe of Michigan in regards to approximately $190 million in non-traded REIT and BDC investments that he recommended from at least June 2011 through January 2015.

The investments generated $11.4 million in commissions for the broker-dealer— of which $9.6 million was paid to Vungarala.

Vungarala, who has served as a registered representative at Purshe Kaplan since 2007, was also employed by the Saginaw Chippewa tribe as its treasury investment manager and participated in decisions regarding its investments.

The tribe prohibits its employees from engaging in business activities that could constitute a conflict of interest. According to the complaint, Vungarala failed to disclose that he and his firm received sales commissions, usually 7 percent, or that the tribe was eligible for $3.3 million in volume discounts.

In addition, FINRA claims that Purshe Kaplan’s “supervisory failures” were the reason that Vungarala’s alleged fraud was not detected or prevented.

The complaint states that Purshe Kaplan “failed to perform an adequate review of Vungarala’ s dual relationship with [the Saginaw Chippewa tribe] to determine whether this relationship heightened the risk of fraudulent conduct…and [the broker-dealer] failed to establish sufficient procedures to mitigate any such risks.”

A spokesperson for the tribe said that they are cooperating with FINRA’s ongoing investigation, but could not comment further at this time.

A spokesperson for Purshe Kaplan declined to comment on the charges, and a request for comment from Vungarala was not returned at press time.

Headquartered in Albany, New York, Purshe Kaplan Sterling Investments is a full-service broker-dealer and financial services firm with more than 440 offices and 1200 registered representatives.

Vungarala has worked in the securities industry since 2004, and currently holds his Series 7 and 66 licenses. A BrokerCheck review revealed no disclosure events, other than a FINRA investigation launched in October 2015, purportedly regarding this matter.

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