Tenant in Common (TIC) Investor Represented By Miller & Milove Wins FINRA Arbitration Award Against Broker Dealer ProEquities, Inc.
May 28, 2013 (PRLEAP.COM) Business NewsA Financial Industry Regulatory Authority (FINRA) arbitration panel awarded more than $589,000 in compensatory damages, interest and costs to a senior citizen client of the law firm of Miller & Milove against ProEquities, Inc., a wholly owned subsidiary of Protective Life Insurance Company (NYSE : PL). The award in Asad v. ProEquities, Inc., et al, FINRA Case No. 12-01167, also included an assessment of the entire cost of the hearing against ProEquities.
The investment complained of involved the Argus Northgate Blackhawk office complexes located in Phoenix, Arizona, managed by Argus Realty Investors, which ProEquities sold to a Los Angeles resident senior citizen in early 2008. The Claimant alleged securities fraud, breach of fiduciary duty and elder abuse, amongst other claims.
The real estate investments at issue were commercial office buildings sold during the waning sales days of TICs – products which include notoriously complex, fee ridden private placement structures and utilize "financial engineering" to induce unknowing investors to part with retirement funds.
TIC, or "Tenancy in Common" is traditionally recognized as a form of property ownership by two or more individuals. The subject TIC investments are real estate securities sold by syndicators in private placement offerings through FINRA broker dealers. TIC cases have been in the news recently because of massive losses, repeated sales abuse and Regulatory warnings against the sale of these dangerous investments to unknowing investors.TICs were often manipulated to utilize the investors own money as "cash returns".
"ProEquities had reason to know that operations of Argus commercial office buildings could not support the advertised returns to investors. Management was aware that the Argus properties were incapable of generating positive cash flow to pay the projected returns. Instead the plan all along was to utilize the investors own money to support distributions," said Bradd Milove, one of the Asad Attorneys.
"ProEquities Research Department possessed information reflecting the plan to utilize investors' money as "cash returns" and also knew of the severe financial problems of Argus Realty, a Southern California based sponsor of TIC offerings, yet approved the Argus Northgate Blackhawk TIC for sale to its client nonetheless."
Tenant In Common and Non-Traded REITs, types of "Alternative Investments," are high commission securities frequently sold through national "Independent Broker" networks with minimal supervision of registered representatives. Regulators such as FINRA have repeatedly warned the broker dealer industry against selling complex private placements to retail investors, particularly senior citizens, without adequate safeguards and supervision. State and Industry regulators have recently fined or censured offending brokers such as LPL Financial, Next Financial Group, Inc., Securities America Inc. and ING Groep NV for unsuitable sales practices or supervisory failures. Federal authorities have also recently cracked down on sponsors of fraudulent TIC offerings, including the recently announced indictment of principals of TIC Sponsor DBSI.
"Miller & Milove has been representing investors in fraudulent private placement and real estate investments since the mid-1980's," stated Miller & Milove partner Brian Miller. "While the TIC form of ownership was relatively new between 2004 and 2008, the same sort of scheme to return investor money under the guise of 'profit', 'return' or 'yield' has been victimizing innocent investors for decades. Notwithstanding, FINRA's warnings have not diminished the willingness of some firms to sell these and other risky and high commission private placement investment products to retirees," Brian Miller added.
The Asad FINRA arbitration proceedings also included the expert testimony and analysis of Dr. Craig McCann of Fairfax, Virginia based Securities Litigation and Consulting Group Inc., who provided an analysis of the economic fundamentals of the Argus TIC.
Miller & Milove continues to investigate FINRA arbitration claims on behalf of investors who suffered losses in TICs and Argus Realty offerings sold by various broker dealers, including the Argus Wachovia Capital Center (Raleigh, North Carolina), Argus Houston Office Buildings, Onyx and Argus International Business Park (Dallas) TIC offerings.
Miller & Milove is an investment fraud and securities law firm with principal offices located in San Diego, California. Attorneys Brian Miller and Bradd Milove are experienced finance and business law attorneys focusing on the recovery of investor losses due to deceptive or fraudulent sales practices. For more information, please see http://www.thesecuritiesfraudlawyers.com/ or call (619) 696-5200.