FINRA Suspends Centaurus Dallas Broker Over Excessive Alternative Investment Sales
From the desk of Jim Eccleston at 蘑菇传媒
FINRA has suspended a Centaurus Financial broker, William Burks, for four months after finding he placed as much as 91 percent of a client’s net worth into illiquid alternative investments. Burks, who has been registered with Centaurus since 2000, was also fined $10,000, as reported by InvestmentNews.
Most firms limit sales of alternative investments to around 10 percent of a customer’s net worth, and some states impose similar restrictions. These products—such as nontraded real estate investment trusts (REITs) and nontraded business development companies (BDCs)—carry risks due to their lack of liquidity, higher up-front commissions, management and internal fees.
As reported by InvestmentNews, the FINRA Acceptance, Waiver and Consent (AWC) letter stated:
Burks agreed to the findings without admitting or denying them, pursuant to an Acceptance, Waiver and Consent (“AWC”). The AWC details that the recommendations were made to customers who had low or moderate risk tolerance and, in some cases, objectives of capital preservation and income. According to InvestmentNews, the recommendations exceeded Centaurus’ concentration guidelines and were inconsistent with the customers’ profiles. FINRA also noted that the transaction paperwork did not reflect the customers’ true investment objectives.
In a separate 2023 matter, Centaurus agreed to pay a $750,000 civil penalty and nearly $5,000 in disgorgement to settle SEC allegations over unsuitable sales of complex structured products to dozens of clients.
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