Published On: November 14, 2017

Stoltmann Law Offices is continuing to investigate Purshe Kaplan Sterling broker Gopi Krishna Vungarala regarding alleged excessive sales charges on the purchase of non-traded real estate investment trusts (REITs) and business development companies (BDCs). Vungarala was terminated from Purshe Kaplan in Midland, Michigan in 2017 after he was investigated by the Financial Industry Regulatory Authority (FINRA). In February of this year, FINRA ordered Purshe Kaplan to pay $3.4 million in restitution to a Native American tribe regarding excessive sales charges on the purchase of REITs and BDCs. The firm was also fined $750,000 for failure to supervise the sales of Vungarala, who was the tribe’s Treasury Investment Manager responsible for the tribe’s portfolio. During the course of the investigation, according to FINRA, Vungarala regularly lied to the tribe regarding his investment recommendations, and the firm did not review the risks associated with the relationship between Vungarala’s role as manager of the portfolio and acting as a registered broker with Purshe Kaplan.
Vungarala recommended the tribe invest more than $190 million in non-traded REITs and BDCs, while misrepresenting to the tribe that neither himself nor the firm would receive commissions from those purchases. In reality, $11.4 million in commissions was generated for Purshe Kaplan, and more than $9 million in personal commissions from those investments went to Vungarala himself. In addition, FINRA found that the firm failed to identify more than 200 purchases eligible for discounts based on volume of purchases, which would have provided more than $3.3 million in volume discounts for the tribe. FINRA rules state that member firms like Purshe Kaplan are responsible for supervising a broker’s activities during the time he is registered with the firm. If the firm does not, it can be liable for investment or other losses suffered by the customer. Please call our securities law firm today at 312-332-4200 to find out how you may be able to recover your losses with Purshe Kaplan on a contingency fee basis. Attorneys are standing by to take your call. It is free with no obligation.


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