FINRA suspended Thomas Lloyd Kunkel of Capital Financial Services and fined him $5,000 for improperly advising an unsophisticated, risk-averse customer to invest in high-risk illiquid Real Estate Investment Trusts ("REITs").
FINRA Case #2011026362601
According to the investigation, Kunkel advised an elderly client of his to engage in 12 separate investments in private placement and REIT products described as "high-risk [and] illiquid."
Investigators described the customer as unfamiliar with private placements and REITs, stating he had "no experience with them or with other high-risk, alternative investments." Furthermore, investigators found that the customer's investment history reflected a risk tolerance below the level of risk presented by the REITs.
FINRA believes that these improper recommendations then resulted in the elderly retiree having a great portion of his liquid net worth concentrated in the aforementioned speculative and illiquid products, which was contrary to the customer's moderate risk tolerance and need for liquidity.
Finally, the Authority charged Kunkel with failing to possess a reasonable grounds for believing that illiquid, high-risk investments and a resultant high concentration of net worth was suitable for his older customer.
Earlier this month, FINRA issued its Regulatory Notice 13-18, providing guidance to brokerage firms and brokers regarding their communications with the public concerning unlisted real estate investment programs and that such communications about REITs be fair, balanced and not misleading.
If you have invested with Thomas Lloyd Kunkel or with any broker or financial professional who has advised you to engage in high-risk illiquid or alternative securities such as REITs, and such a move has resulted in an untenable or adverse level of net worth concentration in speculative interests or this has otherwise proven harmful to your investments, please call The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.