Unfortunately, you are not alone. Many brokers at firms like LPL and Ameriprise were sold high risk, illiquid Tenants In Common (TICs). These sales are coming back to haunt brokerage firms. Dozens of clients have filed lawsuits in recent years related to claims made in TIC sales.
Regulators have been sounding the alarm on fraudulent sales practices related to TICs for years. For example, as early as 2005, the Financial Industry Regulatory Authority (FINRA) issued the first of several notices reminding brokerage firms that it was inappropriate to recommend a TIC transaction if the recommendation was based solely upon information and representations made by the sponsoring company in the TIC’s offering document. When brokerage firms get sued for TICs related sales, a common defense is “we relied on what the TIC sponsor sent us.” FINRA has made clear that this is not enough in terms of due diligence.
Instead, brokerage firms were required as FINRA made clear to conduct a “reasonable investigation” of their own in order to ensure that the offering documents did not contain false or misleading information. FINRA also disclosed members needed to have a clear understanding of the investment goals and current financial status of the investor before recommending a TIC exchange. Unfortunately, many times the reasonable investigation consists of an analysis of how much the broker or brokerage firm will earn.
The good news for investors? Burned TIC clients have enjoyed recent successes in FINRA arbitration claims against the brokerage firms who sold them. For example, recently Linsco got drilled in a FINRA for sales realted to TICs called Heron Cove LLC and Braintree Park. We expect this trend to continue. Ameriprise/H&R Block peddled a high risk TIC called Sequoia. Behringer Harvard TICs also wiped up multiple holders as well in the last 12 months.
To learn more about how TIC losses/frozen funds can be recovered on a contingency fee basis, please contact our law office in Chicago for a free consultation.
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