Colorado Financial Service Corp – Broker Misconduct, Regulatory Issues & FINRA Arbitration
Are you concerned about investments recommended by Colorado Financial Service Corporation? If you’ve suffered financial losses due to misrepresentation, unsuitable recommendations, or lack of supervision, you may be entitled to recovery through FINRA arbitration.
Colorado Financial Service Corporation Review
Colorado Financial Service Corporation (CFSC) (CRD#104343) is a FINRA-registered broker-dealer and investment adviser headquartered in Centennial, Colorado. The firm reportedly offers a range of investment products, including alternative investments like non-traded real estate investment trusts (REITs) and direct participation programs (DPPs), often marketed as private placements.
While the firm is active across the U.S., CFSC has faced regulatory scrutiny and has employed brokers with a history of misconduct, raising concerns for investors.
Regulatory Issues & Compliance Failures
Colorado Financial Service Corporation reportedly has a history of regulatory concerns.
In September 2024, the firm was sanctioned by the Financial Industry Regulatory Authority (FINRA) with a $50,000 fine and censure for failing to develop and implement an anti-money laundering (AML) compliance program, including written procedures, reasonably designed to detect and cause the reporting of suspicious transactions in low-priced securities.
SEC Sanctions Colorado Financial Service Corporation
In addition to FINRA’s findings, the U.S. Securities and Exchange Commission (SEC) issued a cease-and-desist order against Colorado Financial Service Corporation in 2014 for failing to conduct adequate due diligence on private placement offerings. The SEC found that the firm violated Sections 17(a)(2) and 17(a)(3) of the Securities Act by negligently misrepresenting or omitting material facts in connection with sales of certain Regulation D offerings. According to the order, CFSC approved multiple private placements for sale to its customers without thoroughly reviewing the issuers’ financials, business plans, or underlying risks. As part of the settlement, CFSC agreed to cease and desist from future violations and paid a civil monetary penalty.
In 2014, the firm was also reportedly sanctioned by FINRA for failing to establish and maintain a supervisory system that was reasonably designed to achieve compliance with applicable securities laws and regulations. The violations related to:
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Inadequate supervision of electronic communications;
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Failure to conduct proper due diligence on private placement offerings and non-traded REITs;
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Insufficient procedures to ensure the suitability of complex investment products for retail investors.
The firm was fined $10,000 as part of a settlement with FINRA.
Broker Misconduct & Investor Complaints
Colorado Financial Service Corporation has reportedly employed several brokers who have been the subject of investor complaints and disciplinary actions. Allegations include:
1. Russell “Russ” Fieger (CRD #4122326)
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In November 2024, a FINRA arbitration was reportedly filed against Fieger involving claims of unsuitable investment recommendations, including oil & gas DPPs and over-concentration in risky assets.
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Fieger has reportedly been disciplined by Kansas regulators and faced customer complaints related to alternative investments.
2. Victor Lessinger (CRD #830821)
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In 2024, Lessinger was reportedly suspended by FINRA for recommending high-risk closed-end funds, which resulted in over-concentration of 23–37% of clients’ net worth in a single fund family, violating Regulation Best Interest (Reg BI) and FINRA Rule 2010.
4. Michael Mendenhall (CRD #496391)
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A former CFSC broker, Mendenhall was convicted on 25 counts of securities fraud and theft, involving elderly victims and more than $1.4 million in losses. He was sentenced to 30 years in prison in 2013.
The Risks of Private Placements & Alternative Investments
Private placements, REITs, oil and gas partnerships, and other alternative investments may carry higher risks, including:
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Lack of liquidity (you may not be able to sell when you want);
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High fees and commissions;
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Limited transparency;
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Valuation challenges;
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Susceptibility to market and sponsor-related risks.
Because of these risks, brokers must perform adequate due diligence before recommending such investments, and firms must supervise their advisors to ensure compliance with FINRA suitability standards.
Colorado Financial Service Corporation Complaints & Legal Options
If your financial advisor affiliated with CFSC recommended unsuitable investments or failed to disclose material risks, you may be eligible to file a FINRA arbitration claim.
FINRA Arbitration vs. Class Action – What’s the Difference?
If you are seeking to recover investment losses, there are typically two main paths: FINRA arbitration or a class actionlawsuit.
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Aspect
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FINRA Arbitration
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Class Action
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Who files?
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Individual investors
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Group of investors with similar claims
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Speed
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Often faster (8–14 months)
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Can take years
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Control
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You have more control over the case
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Limited involvement
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Damages
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Based on your specific losses
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May be limited or shared
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Outcome
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Binding decision by arbitrators
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Court judgment or settlement
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Most disputes involving brokerage firms and financial advisors are subject to mandatory arbitration clauses, meaning that FINRA arbitration is often your only option to recover losses.
The White Law Group – Nationwide Securities Fraud Attorneys
With offices in Seattle and Chicago, The White Law Group has handled over 800 FINRA arbitration claims on behalf of investors nationwide. We help investors pursue claims for:
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Unsuitable investment recommendations;
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Misrepresentation or omission of material facts;
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Failure to conduct due diligence;
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Negligent supervision.
Free Case Review
If you are concerned about investments you made through Colorado Financial Service Corporation, contact The White Law Group for a free consultation. We may be able to help you recover your investment losses through a FINRA arbitration claim.
Call us at (888) 637-5510
Or visit www.whitesecuritieslaw.com
Frequently Asked Questions (FAQs)
1. What is Colorado Financial Service Corporation accused of?
Colorado Financial Service Corporation has faced regulatory action for failing to properly supervise its brokers and perform due diligence on private placement investments. Several of its affiliated brokers have been the subject of investor complaints and FINRA disciplinary actions involving unsuitable investment recommendations and overconcentration in risky alternative products.
2. Can I recover losses from investments made through Colorado Financial Service Corporation?
Yes, if you suffered losses due to unsuitable investment recommendations, misrepresentation, or lack of supervision by a CFSC broker, you may be eligible to file a FINRA arbitration claim to seek recovery. The White Law Group has experience filing such claims on behalf of investors nationwide.
3. What types of investments are most commonly involved in CFSC complaints?
Many of the complaints involving Colorado Financial Service Corporation relate to high-risk, illiquid investments such as non-traded REITs, oil and gas partnerships, and private placement offerings. These investments often carry high commissions and are not suitable for many retail investors, particularly those seeking income or capital preservation.
