FINRA Award Against LPL Financial Involving TIC Investments

The Investment News is reporting that LPL Financial is on the hook for a $1.4 million arbitration award to an elderly couple who bought real estate tenant in common (TIC) deals.

According to the report, the couple bought two tenant-in-common exchanges, one in 2007 and another in 2008, from former LPL broker David Glenn.

The investors asked for damages of $8 million.

The Finra panel issued the award Friday and, as is typical, gave no explanation for its decision. According to the award, the elderly couple made several allegations, including federal securities fraud and elder abuse.

Tenant in common investments (or TICs) are a form of real estate ownership in which two or more parties have a fractional interest in the property. TICs gained in popularity after a favorable 2002 Internal Revenue Service ruling that allowed investors to defer capital gains on real estate transactions involving the exchange of properties.

Unfortunately, after the real estate bubble burst, many TIC investors saw their properties cut dividends and/or fall in to foreclosure.

One of the biggest TIC sponsors, DBSI Inc., declared bankruptcy in 2008, and broker-dealers that sold those deals have faced dozens of arbitration complaints filed with Financial Industry Regulatory Authority Inc.

The White Law Group has handled many FINRA arbitrations involving TIC investments and have found that in many cases the broker-dealers that recommended these investments failed to perform the necessary due diligence on the investments prior to recommending them for sale to their clients.

TICs can involve high risks and liquidity problems and in many cases brokerage firms misrepresent these risks and instead focus on the income streamed that is promised (and sometimes guaranteed) by these investments.  It is this income stream that often made these TIC investments appealing to retired investors who sought income during retirement, but who also didn’t realize the risks involved with these investments.

If you have questions about a TIC investment you purchased through a financial professional or broker-dealer, please call The White Law Group’s Chicago office at 312/238-9650 for a free consultation.

The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Boca Raton, Florida.

For more information on The White Law Group, please visit our website at https://whitesecuritieslaw.com.