In a recent development, a customer dispute against financial advisor Gary Conley and his firm, American Investors Company, has been closed without any action taken. The client alleged that an investment purchased in April 2015 was illiquid and, therefore, high-risk and unsuitable. The investment in question was a direct investment, specifically a DPP & LP interest.
According to the disclosure on Gary Conley’s FINRA BrokerCheck profile (CRD #52159), the investment was sold, and the proceeds were distributed to the client in 2023. The account statement sent by the custodian contained an error, which reflected the investment that had previously been liquidated. The client, based on the erroneous account statement, mistakenly believed the investment still existed and requested a full distribution.
American Investors Company, where Gary Conley has been registered as a broker since March 8, 1996, and is currently registered as an investment advisor, provided an explanation for the misunderstanding. The firm stated that the proceeds had already been distributed to the client after the liquidation in 2023, and the error on the account statement led to the client’s confusion.
Understanding the allegation and FINRA rules
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The client’s allegation revolves around the suitability of the investment, claiming that it was illiquid and high-risk. FINRA Rule 2111, known as the “Suitability Rule,” requires that financial advisors have a reasonable basis to believe that a recommended transaction or investment strategy is suitable for the customer, based on the customer’s investment profile. This profile includes factors such as age, financial situation, investment objectives, and risk tolerance.
In this case, the client’s concern was the liquidity and risk level of the direct investment in DPP & LP interests. Direct participation programs (DPPs) and limited partnerships (LPs) are often considered alternative investments that may have limited liquidity and higher risk compared to traditional investments like stocks and bonds. Financial advisors must ensure that such investments align with their clients’ investment profiles and that the clients understand the associated risks.
It is crucial for financial advisors to thoroughly explain the characteristics, risks, and liquidity constraints of any investment they recommend to their clients. Clear communication and documentation of these discussions can help prevent misunderstandings and potential disputes in the future. Investopedia highlights some of the worst financial advice that investors may receive, emphasizing the importance of working with reputable and knowledgeable financial professionals.
The importance for investors
This case highlights the significance of investor awareness and the need for transparent communication between financial advisors and their clients. Investors should always be informed about the nature of their investments, including the level of risk and liquidity involved. It is essential to ask questions, read disclosure documents, and ensure a clear understanding of the investment’s characteristics before making a decision.
Investors should also regularly review their account statements and promptly address any discrepancies or concerns with their financial advisors. In this case, the error on the account statement led to confusion and a misunderstanding about the status of the investment. Maintaining open lines of communication and seeking clarification when needed can help prevent such issues from escalating into formal disputes.
Furthermore, investors should be aware of their rights and the avenues available to them if they believe they have been misled or sold unsuitable investments. FINRA, the Financial Industry Regulatory Authority, provides resources and support for investors, including the ability to file complaints and seek resolution through arbitration or mediation.
Red flags and recovering losses
Investors should be vigilant for red flags that may indicate potential financial advisor malpractice. Some warning signs include:
- Lack of transparency or reluctance to provide clear explanations about investments
- Recommending investments that seem inconsistent with the investor’s risk tolerance or investment objectives
- Excessive trading or frequent changes to the investment portfolio without a clear rationale
- Unauthorized transactions or discrepancies in account statements
If an investor suspects wrongdoing or has suffered losses due to unsuitable investments or financial advisor misconduct, they may have options to recover their losses. One such avenue is FINRA arbitration, a dispute resolution process that allows investors to seek compensation for damages caused by the misconduct of financial advisors or brokerage firms. Investment fraud lawyers can provide valuable guidance and representation for investors seeking to recover their losses through this process.
Haselkorn & Thibaut, a national investment fraud law firm with offices in Florida, New York, North Carolina, Arizona, and Texas, is currently investigating Gary Conley and American Investors Company regarding this matter. With over 50 years of combined experience and a 98% success rate, Haselkorn & Thibaut has a proven track record of helping investors recover their losses through FINRA arbitration.
Investors who have concerns about their investments with Gary Conley or American Investors Company are encouraged to contact Haselkorn & Thibaut for a free consultation. The firm operates on a contingency fee basis, meaning there are no fees unless they successfully recover money for their clients. To discuss your case and potential options for recovery, call Haselkorn & Thibaut at 1-888-885-7162 .
Remember, it is crucial for investors to stay informed, ask questions, and take prompt action if they suspect any wrongdoing or unsuitable investment advice. By working with experienced investment fraud attorneys like those at Haselkorn & Thibaut, investors can protect their rights and seek the compensation they deserve.
