FINRA Orders Broker-Dealer to Pay Close to $1 Million for Illiquid Investment Sales
FINRA ordered Mid Atlantic Capital Corporation, an independent broker-dealer, to pay $922,500 to two retirement age investors following an arbitration dispute against the firm relating to sales of non-traded REITs and other investments.
According to the claimant’s attorney, the primary complaints that lead to the arbitration were conflicts of interest and the sale of inappropriate products to unaccredited investors.
Beverly Bien and David Wellman claim breach of fiduciary duty, negligence, negligent misrepresentation, omission, violations of Colorado’s Securities Act, common law fraud, breach of contract, restitution, and negligent supervision.
The claimants had investments in a Sonoma Ridge Partners private placement and KBS real estate investment trusts, and held securities in Contango Oil and Gas, iShares Silver, and Market Vectors Gold Miners.
Mid-Atlantic, whose request for attorney’s fees was denied, was ordered to pay Bien an initial investment loss of $240,321 and compensatory damages of $437,286. The broker-dealer was ordered to pay an additional investment loss of $52,090 to the couple, and compensatory damages of $47,397 to Wellman. The firm was ordered to pay $118,560 in attorney’s fees and additional costs of $26,813.
The claimants were ordered to surrender ownership of interests in all Sonoma Ridge and KBS REIT investments to Mid Atlantic.
