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Independent Financial Group: Complaints & Regulatory Actions

Independent Financial Group Customer Complaints & Regulatory Actions, featured by top securities fraud attorneys, The White Law Group

Independent Financial Group LLC Overview

The White Law Group reviews the regulatory history of Independent Financial Group LLC.

Independent Financial Group, LLC (CRD#: 7717, San Diego, CA), headquartered in San Diego, California, is dually registered as an investment adviser and broker-dealer.

According to its CRD/FINRA BrokerCheck report, the firm has 15 disclosures on its record, including 12 regulatory events and 2 arbitrations, among others. 

FINRA, the regulator that oversees brokers and brokerage firms, and the Securities and Exchange Commission may impose regulatory actions against a broker-dealer such as censures, fines, suspensions and restitution, among others. Regulatory actions can have serious consequences for a broker-dealer’s profile and reputation. The following is a review of the regulatory history of Independent Financial Group LLC. 

Independent Financial Group Ordered to Pay $1 Million for Unsuitable Investments

According to an article in the DI Wire this week, A FINRA panel reportedly directed Independent Financial Group and a former registered representative to pay a combined sum of $1 million to an elderly couple and their related entities due to inappropriate investments in private securities.

The couple reportedly filed a claim against Independent Financial Group and ex-broker Armando Roman, alleging misconduct in recommending direct placement program investments. Their accusations included fraud, elder abuse, breach of contract, fiduciary duty breaches, and failure to comply with securities laws and FINRA regulations. The claimants reportedly represented themselves individually and for several related entities.

The programs included the following investments, Strategic Storage Trust Inc.; Griffin-American Healthcare REIT III Inc.; FS KKR Capital Corporation III; American Realty Capital Trust V Inc.; American Realty Capital Healthcare II Inc.; Walton US Land Fund 3 LP; NorthStar Healthcare Income; CION Investment Corp; and Griffin Capital Essential Asset REIT II.

A FINRA arbitration panel found Independent Financial Group and Roman jointly liable and ordered them to pay $1 million in compensatory damages. This amount included $400,000 to an IRA, $100,000 to The Good Daughter LLC, and $500,000 to Faraway Assets LLC. The panel rejected Roman’s request to remove the case from his record.

Originally, the claimants sought $3.5 million in damages, but the awarded sum was $1 million.  Roman, no longer registered as a broker, is an investment advisor with Axiom Founders Family Office. He reportedly mentioned in his BrokerCheck profile comment that the firm plans to defend the claims, asserting they lack merit and evidence, stating that the investments were aligned with the stated objectives, risk tolerance, and time horizon.

FINRA Censures and Fines Independent Financial Group for Failure to Supervise

According to a Letter of Acceptance Waiver and Consent on April 8, 2021, FINRA censured and fined Independent Financial Group $200,000 for supervisory issues.

From January 2008 through March 2016, the firm reportedly failed to reasonably supervise one of it’s former registered representatives who made  unsuitable recommendations to customers. The representative reportedly recommended that his customers concentrate their retirement assets and liquid net worth in speculative and illiquid securities. Apparently the firm became aware of red flags indicating that the representative was making unsuitable recommendations to his customers yet the firm failed to take reasonable actions to investigate and stop the misconduct. 

Broker Misconduct and Customer Complaints

All broker-dealers have a responsibility to adequately supervise its employees. They must ensure the necessary procedures and systems to detect misconduct.  Brokerage firms that fail to monitor the business activities of their employees may be liable for investment losses due to negligent supervision for the misconduct of their employees.

When brokers violate securities laws, such as making unsuitable investments, the brokerage firm they are working with may be liable for investment losses through FINRA Arbitration. 

There have been several cases of registered representatives employed by Independent Financial Group who were allegedly involved in broker misconduct and fraudulent activities. 

On March 13, 2020, FINRA reportedly revoked the registration of former Independent Financial Group advisor James M. Lamont after he allegedly failed to failed to pay fines and/or costs of $99,437.64 in FINRA Case #2017052705801. FINRA  reportedly suspended Lamont from working in the securities industry for 18 months and fined him $10,000.

FINRA alleges that between September 2015 and November 2017, Lamont purportedly engaged in unapproved private securities transactions involving the sale of promissory notes relating to Woodbridge Group of Companies, a purported real estate investment fund.

He reportedly has 27 disclosure events on his broker check record, including 3 regulatory events, 10 judgement/liens, 1 employment separation and 13 customer complaints.

Allegations include misrepresentation and unsuitable investments, among others.

Lawsuit filed against Independent Financial Group and Rep Shawn Davis

March 2019 – A civil lawsuit was filed involving Independent Financial Group and its registered representative, Shawn Davis (CRD#: 2911230) in the Superior Court of the State of California requesting unspecified damages founded on allegations that false or misleading statements had been made concerning a business development company, real estate security, equipment leasing products and direct investments.  The claims further alleges that alternative investment transactions recommended by Shawn Davis were inappropriate and that Independent Financial Group and Davis’ former securities broker dealer employers Berthel Fisher and WFG Investments failed to supervise the transactions effected in the customer’s account.  The case is Civil Case No. S-CV-0042532.

David was registered with Independent Financial Group in Auburn, CA from 2014 until 2017. He reportedly had 12 customer complaints filed against him for allegations of unsuitable investments and misrepresentation, among others. 

October 2018 – Former Independent Financial Group advisor Jon Pariser was barred after failing to provide FINRA with requested documents and information related to allegations that he referred some of his customers to an individual who was not registered and who may have recommended or sold potentially unsuitable securities to them.

Pariser was reportedly registered with Independent Financial Group  in Pacific Grove, CA from 2014 until 2018. He reportedly has ten customer complaints filed against him since 2006, four of which are still pending, according to his broker profile. Allegations include fraudulent, unregistered securities recommendations among others. 

July 2018 – The Financial Industry Regulatory Authority (FINRA) reportedly barred former Independent Financial Group advisor Kyusun “Kenny” Kim from working in the securities industry after he allegedly made unsuitable recommendations to numerous senior customers that they concentrate their retirement assets and liquid net worth in speculative and illiquid securities.

Kim purportedly falsely inflated the net worth figures of several customers on their new account forms and other documents so that they appeared eligible to purchase certain speculative investments, in violation of FINRA Rules.

According to his FINRA BrokerCheck report, Kim has 23 customer complaints on his record. Allegations include wrongful conduct, breach of fiduciary duty, unsuitable investments, breach of contract and financial abuse, among others.

He was registered with Independent Financial Group in San Diego, CA from 2006 until March 2016.

The SEC Sanctions Independent Financial Group

September 2019 – The SEC charged Independent Financial Group with breaches of fiduciary duty and inadequate disclosures in connection with its mutual fund share class selection practices and the fees it and its associated persons received. Between January 1, 2014 to March 30, 2017 the broker dealer reportedly purchased, recommended, or held for advisory clients mutual fund share classes that charged 12b-1 fees instead of lower-cost share classes of the same funds for which the clients were eligible. The firm and its associates received 12b-1 fees in connection with these investments and reportedly failed to disclose the conflicts of interest related to its receipt of 12b-1 fees, and/or its selection of mutual fund share classes that pay such fees. The firm and its representatives also reportedly received 12b-1 fees for advising clients to invest in or hold such mutual fund share classes.

The firm was censured and agreed to pay disgorgement and prejudgment interest to affected investors, totaling $1,426,150.64.

Free Consultation with a Securities Attorney

The foregoing information, which is all publicly available, is being provided by The White Law Group. The White Law Group is a national securities arbitration, securities fraud, and investor protection law firm with offices in Chicago, Illinois.

If you have concerns regarding investments you purchased through Independent Financial Group and would like to speak with a securities attorney, please call The White Law Group at 888-637-5510.

For more information on The White Law Group, visit www.whitesecuritieslaw.com.

 

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