FINRA Levies Complaint Against VFG Securities
The Financial Industry Regulatory Authority filed a complaint against VFG Securities and its chief executive officer, Jason Vanclef, claiming that the broker-dealer’s supervisory systems were inadequate.
VFG Securities obtained roughly 95 percent of its revenue from the sale of non-traded direct participation programs and real estate investment trusts between approximately November 2010 and June 2012.
FINRA claims that “the firm failed to reasonably supervise illiquid alternative investments, including nontraded DPPs and non-traded REITs, to ensure that customers…did not become overly concentrated in illiquid securities.”
In addition, FINRA claims that the company failed to supervise the content of the consolidated investment reports it provided to its customers to ensure the valuations were up to date. It also alleges that recommendation spreadsheets distributed to four customers contained false and misleading liquidity timelines and misleadingly characterized distributions as “income.”
Vanclef wrote and published “The Wealth Code: How the Rich Stay Rich in Good Times and Bad,” a book FINRA claims was used “as sales literature to promote investments in non-traded DPPs and REITs and to lure potential investors to VFG.”
The book, which was distributed at company events and given directly to customers from September 2009 to January 2013, states that non-traded DPPs and REITs offer both high return and capital preservation.
FINRA believed the statement was inaccurate and misleading, given the speculative nature of these investments, and contradicted information provided in the prospectuses.
In his book, Vanclef stated that investors could “reasonably achieve 8-12 percent results,” on their investments and “get consistent returns” that provided “piece [sic] of mind.”
FINRA said that “these claims were unwarranted because they were promises of future results and failed to provide the reader a sound basis to evaluate the claim.”
The book was not reviewed or approved by a registered principal at VFG, although FINRA alleges that it was used as a sales tool, nor was it submitted to FINRA’s advertising department as required under NASD rules.
Vanclef could not be reached for comment at press time.
