FINRA fined Centaurus Financial and former broker Donnie Ingram for unsuitable unit investment trust (UIT) and real estate investment trust (REIT) products, including Bluerock Residential Growth REIT (BRG) and MacKenzie Realty Capital (MAC), a non-traded business development company. The order also requires Centaurus and Ingram to jointly pay nearly $400,000 in restitution to identified customers adversely affected by Centaurus and Ingram's misconduct.
The fines and restitution follow a 2022 complaint that the Anaheim-based Centaurus Financial failed to supervise broker Donnie Eugene Ingram (CRD #1416971)'s unsuitable REIT sales despite Centaurus claiming Ingram was under heightened supervision.
According to investigators, Centaurus in its "heightened supervision plan" simply allowed Ingram to hire a supervisor of his choosing who, unsurprisingly, purportedly failed to supervise Ingram as required regarding suitability.
This isn't Centaurus' first time in the spotlight with suitability issues. For example, Centaurus remains under investigation regarding losses and unsuitable recommendations of risky GWG L-Bonds. GWG Holdings offerings, according to their offering documents, were high risk, illiquid, and speculative investments that shouldn't have been recommended to many retail customers.
FINRA's initial complaint against Centaurus and Ingram identified alternative products unsuitably recommended to customers, resulting in losses, as Inland Western REIT, Bluerock Residential Growth REIT, and MacKenzie Realty Capital.
Investigators charged Ingram with unsuitably recommending UITs that caused customers to incur excessive and unnecessary sales charges, commission fees, or advisory fees, estimated at more than $300,000 of additional expenses without justification.
FINRA rules prohibit registered representatives from maximizing their own compensation to the detriment of their customers. Firms are also required to implement and enforce supervisory procedures and policies to prevent such a violation.
If you invested with Centaurus Financial or broker Donnie Ingram in unit investment trusts or REITs that were unsuitable for you, and these improperly recommended products and transactions resulted in damages, such as incurring excess sales charges, commissions, or advisory fees, please call an experienced FINRA arbitration attorney at The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.