November 2016-Plano, Texas/Culver City, CA
VFG Securities, Inc. and its owner, Jason Vanclef, reached a settlement with the Financial Industry Regulatory Authority (FINRA) to resolve allegations by the securities industry regulator that he and his firm had overly concentrated customer accounts in illiquid investments and used a book Vanclef had written, “The Wealth Code” to promote sales.
Vanclef was fined $10,000 and suspended for 10 days. VFG Securities was censured and fined $50,000.
FINRA’s FIndings and Conclusions include:
- Vanclef used The Wealth Code as sales literature to promote investments in non-direct Participation Programs and non-traded Real Estate Investment Trusts (REITs).
- Vanclef repeatedly claimed in The Wealth Code that non-traded DPPs and non-traded REITs offer both high return and capital preservation. This claim was inaccurate and misleading, and contradicted information provided in the prospectuses for the instruments that Vanclef and VFG sold. Non-traded DPPs and nontraded REITs are speculative investments that contain a high degree of risk, including the risk that an investor may lose a substantial portion or all of his or her initial investment.
- As part of Respondents’ pitch to sell non-traded DPPs and non-traded REITs, they also distributed recommendation spreadsheets to four customers that contained false and misleading liquidity timelines for non-traded DPPs and non-traded REITs. The recommendation spreadsheets also misleadingly characterized distributions from non-traded DPPs and non-traded REITs as “income” and improperly projected performance of the recommended non-traded DPPs and non-traded REITs.
- VFG’s supervisory systems, including its written supervisory procedures (“WSPs”), were inadequate in two respects. First, Respondents provided consolidated investment reports to customers during in-person meetings to discuss their investments, yet the Firm failed to supervise the content of those reports to ensure that customers received the most up-to-date valuations for the non-traded REITs and non-traded DPPs that they had purchased. Second, the Firm failed to reasonably supervise illiquid alternative investments, including nontraded DPPs and non-traded REITs, to ensure that customers following Respondents’ recommendations did not become overly concentrated in illiquid securities.
Alternative investments include non publicly traded real estate investment trusts (REITS) , equipment leasing, oil and gas investments, hedge funds, real estate, commodities and derivatives contracts and, managed futures. It may also include art, wine, antiques, coins or stamps. These investments tend to be complex, illiquid, nontransparent, hard to value and expensive. Many of the alternative investments sold over recent years are not traded on any public market making them difficult to value and even more difficult to liquidate if cash is needed.
VFG Securities, is headquartered in Culver City, CA, and has about 12 brokers located in six branch offices, including Plano, Texas.
If you have losses in an account in an account at VFG Securities contact us to discuss how you may be able to recover damages for those losses.
Rex Securities Law , with offices in Boca Raton, FL, and Austin, TX, provides representation to investors nationwide who are seeking recovery of investment losses due to the negligence or fraud of stockbrokers and broker dealers. If you have questions about how your account has been handled, call to speak with an experienced securities attorney.
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