As Emily Carter, a seasoned financial analyst and legal expert, I’ve witnessed firsthand the devastating consequences that can arise when brokers prioritize their own interests over those of their clients. The recent case involving a Texas retiree’s claim against Calton & Associates, a brokerage firm, serves as a sobering reminder of the importance of due diligence and adherence to ethical standards in the investment industry.
“An investment in knowledge pays the best interest.” – Benjamin Franklin
The claimant, a retiree from Texas, filed a complaint with the Financial Industry Regulatory Authority (FINRA), seeking up to $500,000 in damages for losses incurred through private investments in GPB Capital Holdings and similar products that are not traded on the regular market. The crux of the matter lies in the stark contrast between the promises made and the reality that unfolded.
According to the claimant, their account was inherited by Calton & Associates as a result of the firm’s acquisition of IMS Securities, which was expelled by FINRA and is no longer operational. They were assured of income-generating, safe investments with principal protection. However, the reality was far from these assurances.
Instead of the promised safety, positions were taken in GPB Funds and Investments, and the claimant’s funds were invested in privately traded entities that were incompatible with their risk profile. Adding insult to injury, the issuer, GPB Capital Holdings, an alternative asset firm, is now under scrutiny for allegedly operating a Ponzi scheme of staggering proportions, estimated at $1.8 billion.The Healthcare Trust Real Estate Investment Trust (REIT) and an investment known as CION, which were part of the other positions sold to this investor, also appear to be in troubled waters, further compounding the claimant’s losses.
One of the most fundamental principles of investment is diversification, a concept that was blatantly disregarded in this case. Overconcentration of a portfolio in a single asset or asset class is a recipe for disaster, and when coupled with risky and illiquid investments, the consequences can be catastrophic. Subjecting an elderly investor’s portfolio to such risks is an egregious breach of fiduciary duty.
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While these unsuitable recommendations were initially made by a former broker at IMS Securities, Calton & Associates assumed full responsibility when they acquired the firm and its accounts. The Dallas-based investor was even reassured about the safety of their funds and the regularity of returns, promises that were ultimately broken.Faced with this betrayal of trust, the investor filed for damages, alleging various misdeeds, including overconcentration, failure to supervise, breach of contract, misrepresentations and omissions, vicarious liability, and unsuitability.
Alarmingly, it appears that the brokers involved, Thurman Crawford and another former IMS broker who became an agent for Calton, were effectively self-supervised, meaning their trades did not undergo the necessary oversight and approval processes that would typically introduce a second level of checks and balances against wrongdoings or mistakes.
Calton & Associates is no stranger to such allegations. The broker-dealer and its registered representatives have previously faced accusations of inadequate supervision, misrepresentations and omissions, breach of fiduciary duty, and unsuitability. Providing ongoing supervision is an affirmative duty of a broker-dealer, and failure to do so can have severe consequences for investors.
The official CRD records of both Crawford and the other broker also reveal a trail of complaints, including claims during their time as IMS brokers, involving unsuitable private placements and notes made to earlier investors. One case was settled for $275,000, while another was resolved for over $170,000, further underscoring the gravity of the situation.
In the face of such egregious misconduct, it is imperative for investors to take proactive steps to protect their hard-earned wealth.
If you have been unsuitably recommended investments in GPB Capital private placements or suspect being misled by your financial advisors, I strongly encourage you to schedule a free, no-obligation case consultation with our Texas investment fraud lawyers at 1-888-628-5590.
Haselkorn & Thibaut and its attorneys have over 45 years of experience representing investors in FINRA arbitration cases against broker-dealers and their registered representatives whose negligence and/or fraudulent actions may have led to financial losses.
We have recovered millions of dollars on behalf of our clients, and our unwavering commitment to justice and accountability remains steadfast.
In the ever-evolving landscape of finance, it is crucial to remain vigilant, seek professional guidance when necessary, and hold those who violate ethical standards accountable for their actions. By doing so, we can work towards a more transparent and ethical financial landscape, where the interests of investors are truly prioritized, and the hard-earned fruits of their labor are safeguarded against unscrupulous practices.
