FINRA Orders Worden Capital to Pay $1.6 Million for Unsuitable REIT Investments

A Financial Industry Regulatory Authority arbitration panel has ordered Worden Capital, a brokerage formed in 2008 and expelled by FINRA in 2022, to pay more than $1.6 million to plaintiffs who said the firm had sold and misrepresented non-traded real estate investment trusts.

FINRA says Worden invested the claimants’ portfolios in “unsuitable securities,” including non-traded REITs, between 2014 and 2015.

The settlement says Worden Capital and several of its former executives must pay the award to Charles Smith and his Florala, Alabama-based firm Selrahc LP, which were listed as co-claimants.

Previous Worden executives Jamie John Worden, Gregory Patrick Bodkin and Richard Reiss Borgner were also named in the complaint. The FINRA panel ordered that Bodkin’s record be expunged, finding that the evidence clearly demonstrated that he was not involved in the violations and was not employed by Worden Capital when the securities transactions took place.

According to FINRA, Smith and Selrahc requested $2.5 million for loss of income that they said would have been received if their portfolios had been “managed properly,” as well as for lost fees, management charges, commissions, and other costs associated with the action. The final settlement award was $1.6 million.

In the hearing, the attorney for Smith and Selrahc also argued for sanctions against Worden and the other respondents for essentially lying to the panel when they provided false Morgan Stanley account statements. The panel agreed and awarded the claimants $1,000.

In addition, Worden Capital must pay $1.4 million in compensatory damages, $250,000 for fees and commissions paid, $9,207 for other costs, $625 for filing fees paid to FINRA’s dispute resolution services, and another $1,000 as a sanction for false statements plus attorneys’ fees.

Click here to visit The DI Wire directory page.