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Written by 4:17 pm Blog, Current Investigations

Purshe Kaplan Sterling Investments Fined $3.4 Million

LPL Financial

Financial Advisor Gopi Vungarala sells $190 million in non-traded REITs and BDCs to Native American Tribe

According to FINRA, Purshe Kaplan Sterling Investments will pay close to $3.4 million in restitution to a Native American tribe. The tribe paid excessive sales charges on purchases of non-traded REITs and business development companies (BDCs).

In addition to restitution, the Financial Industry Regulatory Authority Inc. fined Purshe Kaplan Sterling Investments for its failures to supervise the sales of these securities.

Failure to Supervise

FINRA states from July 2011 – January 15, 2015, Gopi Vungarala was the tribe’s registered representative as well as being employed by the tribe as its investment manager. He was responsible for managing the tribe’s investment portfolio. FINRA further alleges the firm failed to adequately review the risks inherent in that relationship or establish procedures designed to mitigate the risks. It fined the firm $750,000 for its failure to supervise.

Vungarala, due to lack of supervision, was able to misrepresent to the tribe that neither the firm nor he would receive commissions on its purchases. He allegedly persuaded the tribe to invest more than $190 million in non-traded REITs and BDCs.

FINRA states that Vungarala received at least $9 million in commissions from the tribe’s investment.

Purshe Kaplan Sterling allegedly failed to identify that more than 200 of the tribe’s purchases were eligible for volume discounts. Vungarala’s commissions would have been reduced to approximately $6 million if the tribe had received the discounts for which it was eligible. Purportedly, Vungarala misrepresented to the firm that the tribe did not want to receive the volume discounts.

According to FINRA BrokerCheck, Vungarala was registered with Purshe Kaplan Sterling Investments in Midland, MI from December 2007 until he was discharged in February 2017.

The FINRA complaint was filed in February 2016. The charges alleged in the same complaint against Gopi Vungarala, the tribe’s registered representative at the firm, are ongoing.

Brokerage firms are required to adequately supervise their agents to ensure they are complying with FINRA rules and they can held responsible for any losses in a FINRA arbitration claim if it is determined that they failed to properly supervise their agent.

Free Consultation

If you invested with suspicious broker and would like to speak to a securities attorney to determine if your brokerage firm may be liable for your investment losses, please call the securities attorneys of The White Law Group at 888-637-5510 for a free consultation.

This information is provided by The White Law Group, a national securities fraud, securities arbitration, and investor protection law firm with offices in Chicago, Illinois. For more information on The White Law Group, visit https://whitesecuritieslaw.com.


Tags: , , , , , , , , Last modified: April 11, 2023