FINRA Accuses VFG Securities of Improper Sales of REITs and Other Private Placements

The Financial Industry Regulatory Authority Inc. (FINRA) has filed a complaint against VFG Securities, Inc., claiming that the brokerage firm generated almost 95% of its revenue from the sale of non-traded real estate investment trusts (REITs) and other illiquid direct private placement (DPP) investments. These securities often pay very large commissions, which can entice brokers to recommend and sell the risky investments even when they are not suitable for the investor. Unsuitable investment recommendations are one of the most common forms of stockbroker misconduct.

FINRA has accused VFG, which is headquartered in Culver City, California and has offices in Plano, Texas, of failing to supervise its brokers to ensure that clients’ investment portfolios were not overly concentrated in these risky and illiquid REITs and DPPs. According to FINRA, from November 2010 to June 2012, VFG generated almost 95% of its revenue from the sale of non-traded REITs and other direct participation programs.

While VFG’s owner, Jason Vanclef, has complained that FINRA is persecuting his firm, we are skeptical of his pleas of innocence. Mr. Vanclef apparently used a book titled The Wealth Code that he had written as sales literature to promote investments in non-traded REITs and DPPs. So it appears that VFG may have actively promoted the sale of these risky investments in an effort to capture large commissions.

In its complaint, FINRA alleges that The Wealth Code states that non-traded DPPs and non-traded REITs offer both high return and capital preservation. This is a typical claim made by brokerage firms that sell these risky investments. Unfortunately for unsuspecting investors, the claims are not accurate and are misleading. Non-traded DPPs and non-traded REITs are speculative, high-risk investments. We are happy to see that FINRA is cracking down on what may be customer abuses occurring at VFG.

Contact Us Today

Dimond Kaplan & Rothstein, P.A. has represented many investors throughout the United States who have lost money from unsuitable sales of risky non-traded REITs and DPPs. If you lost money at VFG in a REIT or DPP, you may have valid FINRA arbitration claim to recover your investment losses. Contact a DKR investment fraud lawyer for a free case evaluation.

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