Galvin Legal, PLLC is launching an investigation on behalf of investors who may have suffered losses investing with Cabot Lodge Securities LLC. If you suffered losses investing with Cabot Lodge Securities LLC, then Galvin Legal, PLLC may be able to help you recover your losses in a Financial Industry Regulatory Authority (“FINRA“) arbitration claim.
UPDATE 1/2/2020: Cabot Lodge Securities LLC (CRD #159712, New York, New York) January 2, 2020 – The firm was named a respondent in a FINRA complaint alleging that it participated in an IPO of a non-traded REIT in which the amount of organization and offering expenses exceeded fair and reasonable limits. The complaint alleges that the gross proceeds for the IPO were $49,728,392, composed of the amount raised through the primary offering to the public and the distribution reinvestment program. The expenses and the underwriting compensation for the IPO were $14,019,027 and $7,652,046, respectively. The expenses and the underwriting compensation well exceed the 15 percent and 10 percent caps and were unfair and unreasonable. The firm has not corrected these overages, whether by reimbursement of excessive expenses or otherwise. The complaint also alleges that the firm failed to disclose underwriting compensation to its representatives. The firm participated in the distribution of the IPO even though none of the retention shares or incentive shares awarded to persons associated with the firm were in the prospectuses and the supplements thereto, that were filed in connection with the IPO, and pre-IPO awards to its representatives were never adequately disclosed. The complaint further alleges that the firm failed to establish, maintain and enforce a supervisory system, including written procedures, that was reasonably designed to ensure compliance with FINRA’s rules prohibiting the firm’s participation in a REIT offering in which excessive organization and offering expenses were incurred. In addition, the firm’s investment banking manager failed to review the prospectus to ensure that any restricted share compensation, including his own, had been disclosed. Nor did the manager, or anyone else at the firm, take steps to determine whether other persons associated with the firm received stock awards and, if so, whether they were disclosed in the IPO prospectuses. In addition, the complaint alleges that the firm made an unsuitable recommendation to an elderly customer in light of his investment experience, existing holdings, risk tolerance and investment objectives. The firm recommended that the customer sell his municipal bond fund holdings and invest $75,100 of the proceeds in a highly illiquid non-traded REIT with no operating history and significant distribution risk. The customer’s investment in the REIT raised his concentration in REITs to 57 percent of his liquid net worth, which was unreasonably high for him. (FINRA Case # 2014041541401)
Cabot Lodge Securities LLC (CRD# 159712) (SEC# 8-69009)
As of April 4, 2020, Cabot Lodge Securities LLC’s FINRA BrokerCheck Report contains the following:
1 Regulatory Event Disclosures
Main Office Location
200 VESEY STREET
NEW YORK, NY 10281
200 VESEY STREET
NEW YORK, NY 10281
Business Telephone Number
Direct Owners and Executive Officers
PKS HOLDINGS LLC, MEMBER
LEIBOWITZ, ROGER FARRELL (CRD#:2536523), FINOP/PRESIDENT/CEO
SMITH, STEPHEN JOSEPH (CRD#:1123669), OPTIONS PRINCIPAL
ZARZYCKI, BENJAMIN GERALD (CRD#:6451892), CHIEF COMPLIANCE OFFICER, INVESTMENT BANKING MANAGER
FINRA requires brokerage firms to conduct due diligence on investments and to conduct a suitability analysis when recommending securities to a customer that takes into account the customer’s knowledge and experience. Brokerage firms that fail to conduct adequate due diligence or that make unsuitable recommendations can be held responsible for the customer’s losses in a FINRA arbitration claim.
This information is all publicly available and is being provided to you by Galvin Legal, PLLC.
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