A Financial Industry Regulatory Authority (FINRA) arbitration claim has been filed against brokerage firm Calton & Associates by a Texas retiree, seeking up to $500K in damages. The claim arises from losses suffered by the claimant in private placements of GPB Capital Holdings and other products not traded publicly.
The claimant’s account was inherited by Calton & Associates as a result of their acquisition of IMS Securities, which was expelled by FINRA and is no longer operational. He was assured income-generating, safe investments with the principal being protected.
What actually happened is different. Positions were taken in GPB Funds and Investments and his funds invested in privately traded entities, incompatible with his risk profile. The issuer, GPB Capital Holdings, an alternative asset firm, is now under the scanner for operating a Ponzi scheme of the magnitude of $1.8B.
The Healthcare Trust Real Estate Investment Trust (REIT) and an investment that was known by the name of CION, which is part of the other positions sold to this investor, also seem to be in trouble.
Overconcentration of a portfolio in a single asset or asset class goes against one of the most basic principles of investment, that of diversification, and can have damaging consequences. Doing so in investments that are risky and illiquid, is worse. And doing it with the portfolio of an older investor is, by extension, much worse.
Though these unsuitable recommendations were made by an ex-broker at IMS Securities, since Calton & Associates took over the firm and its investments and accounts, by default they assumed full responsibility. The Dallas-based investor was even reassured regarding the safety of his funds and the regularity of returns on them.
Unfortunately, that did not happen, leading the investor to file for damages and alleging various misdeeds like overconcentration, failure to supervise, breach of contract, misrepresentations and omissions, vicarious liability, and unsuitability.
Thurman Crawford, the original broker, was replaced by another ex-IMS broker who became an agent for Calton. It now seems that both Crawford, and the other broker, were self-supervised. In other words, not supervised. It means they did not need to have their trades approved by a supervisor which would normally introduce a second level check on wrongdoings or mistakes.
Many of the charges are not new for Calton & Associates. They have been at this place, faced with accusations of inadequate supervision of brokers, earlier. The broker-dealer and their registered representatives have also been accused of misrepresentations and omissions, breach of fiduciary duty, and unsuitability in the past. Providing supervision on an ongoing basis is an affirmative duty of a broker-dealer.
The official CRD records of both Crawford and the other broker also have other complaints, including claims during their time as IMS brokers, of unsuitable private placements and notes made by earlier investors. There is a record of one case being settled for $275K and another for over $170K.
What is an investor to do?
If you have been unsuitably recommended investments in GPB Capital private placements, or suspect being otherwise taken for a ride by your financial advisors, schedule a free, no-obligation case consultation with our Texas investment fraud lawyers at 1 888-628-5590 today.
Haselkorn & Thibaut and its attorneys have over 45 years of experience and represented investors in their FINRA arbitration cases against broker-dealers and their registered representatives whose negligence and/ or fraudulent actions may have led to you suffering financial losses. We have recovered millions of dollars on behalf of our clients.