March 2013-FINRA Case # 12-1157
A couple from Minnesota was awarded $290,000 against David Theis, a broker for QA3 Financial Corp., following an arbitration alleging failure to supervise, misrepresentation, negligence, breach of fiduciary duty, common law fraud and promissory estoppel.
The claimants alleged they were convinced to invest in the following investments based upon the false and misleading misrepresentations of the selling broker Theis:
- IMH Secured Loan Fund
- Black Diamond Energy
- Arci Terra Note Fund III
- Clearwater 2008 Note Program
- United Development Funding
During the course of the proceeding, QA3 filed for bankruptcy, staying the proceeding as to them. The case continued against broker Theis
Beware of Small Undercapitalized Broker Dealers
This case points out why investors should be wary when dealing with smaller independent broker dealers who may be thinly capitalized. If a broker makes a mistake like this in your account, you want to know that the firm has adequate resources to compensate you and not be forced into bankruptcy.
Before entrusting your nest egg to a small broker dealer you should obtain copies of their most recent financials and determine their net capital to assure yourself that your trust is well placed. You should also review the FINRA disclosures for the broker you are thinking of placing your account with. See this for more information on how to access the FINRA BrokerCheck website.
If you have questions about your brokerage account or stock market losses, contact us for a no charge consultation.
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Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.