Donald Woods, a previously registered broker and previously registered investment adviser, was suspended in all capacities by the Financial Industry Regulatory Authority (FINRA) for misrepresenting a customer’s liquidity and recommending unsuitable investments according to an investigation by REIT investment loss attorney, Alan Rosca.
Securities attorney Alan Rosca, of Rosca Scarlato LLC law firm is investigating conduct related to the suspension of Donald Woods by FINRA on the allegation of misrepresenting a customer’s liquidity and recommending unsuitable investments.
Donald Woods was last in the employment of Thurston Springer Financial, a Louisville Kentucky based firm. He was registered with the FINRA member firm between 22nd December 2016 and 15th August, 2018.
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Donald Woods Was Suspended by FINRA for Alleged Misrepresentations and Unsuitable Investment Recommendations
Securities attorney Alan Rosca reviewed publicly available information and found that Donald Stephen Woods was the subject of a regulatory action instituted against him by the Financial Industry Regulatory Authority for making misrepresentations about the liquidity of his investor and recommending unsuitable investments. This is according to the reports on his FINRA brokercheck page.
According to the brokercheck reports, FINRA suspended Donald Stephen Woods in all capacities for the period of six month in a regulatory action initiated on 6th May, 2020. In this action, FINRA alleged that Donald Woods overstated the liquid net worth of his customer in an application he submitted to his member firm for the purchase of real estate investment trusts (REIT).
It was alleged that the misrepresentation was done to circumvent the restrictions put in place by the member firm. It was further alleged that Donald Woods had no reasonable basis to make such investment recommendations to his customer as such investments were inconsistent with the customer’s investment profile as reported.
As stated in the reports, Donald Stephen Woods received $5,600.70 in commission from these transactions. In resolving this action, Donald Woods without admitting or denying the findings consented to an Acceptance, Waiver & Consent (AWC) thereby subjecting himself to the sanctions therein.
In addition to the suspension in all capacities, he was also required to pay $10,000 in civil and administrative penalties as well as $5,600.70 in disgorgements. The suspension is expected to run from 18th May, 2020 till 17th November, 2020.
What should investors know about REITs?
Generally speaking, REIT is a form of alternative investment that is becoming more popular. A REIT is a company that makes investments into real estate either by owning the real estate or financing it with the ultimate aim of generating income. It could be said to also be a pool of investor funds which is then invested in real estate backed securities.
REIT could be publicly traded or Private. It would be said to be publicly traded where it is registered with the Securities and Exchange Commission (SEC) and traded on the stock exchange such that investors can buy them like stocks. Where the REIT is private, it is usually not registered with the SEC and traded only through brokers and broker dealers.
In the face of the diversification REIT presents to investors, REIT could also pose as a risky investment to the investors. Considering the volatility of the real estate sector which forms the underlying assets of the REIT investments, the REIT could be subject to such volatility. REIT also poses the potential for high management and commissions to be paid by the investors.
REIT could also be used to perpetrate a fraud, especially the private traded REIT which are not registered with the SEC. In this situation, a broker or investment adviser who has not conducted an adequate due diligence could be exposing the investors to potential substantial losses.
All these are general considerations, not necessarily applicable to any one case, and do not constitute legal advice. Investors looking for legal advice for their particular situation should contact a qualified lawyer and discuss about the facts applicable to their specific case.
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Donald Stephen Woods Has Pending and Settled Customer Disputes
The securities attorney also found that Donald Woods settled a customer dispute filed on 1st October, 2019. The client in this dispute alleged that their investment need was to invest in low risk investments, but they were encouraged by Donald Woods to invest in risky business development companies and REITs. The client also alleged that the investment adviser made misrepresentations which led to monetary losses and losses in connection to a variable annuity. The client, who also alleged inadequate supervision sought to recover $140,000 in damages but the dispute was settled for $170,000.
Donald S. Woods also settled another customer dispute filed in March 2019 on similar allegations. The client alleged that Donald Woods made misrepresentations and unsuitable investment recommendations in respect of alternative investment purchases. This dispute was settled for $20,000.
Another dispute with very similar allegations was reportedly filed on 31st January 2019. The client in this dispute also alleged misrepresentations and unsuitable investment in connection with the purchase of alternative investments. Donald Stephen Woods settled this customer dispute for 10,000.
A customer dispute was instituted in February 2019. The client was seeking $350,000 in damages and alleging misrepresentation and unsuitability of investments in connection with alternative investments. The dispute was closed without any action.
Finally, it is important to note that, as of the date of this article, there has not been a finding of liability as to the complaints or allegations mentioned in this article, unless otherwise indicated. Any reader should also read the original sources hyperlinked in this blog for accuracy, including any BrokerCheck report and/or record of any disciplinary or regulatory action. Those sources are incorporated by reference into the text of this blog, and are the governing materials in case of any inconsistencies or typos in this blog.
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Securities Lawyer Investigating Potential Options for Donald Woods Investors
The Rosca Scarlato LLC law firm represents investors who lose money as a result of investment-related fraud or misconduct and is currently investigating conduct related to Donald Stephen Woods’ suspension by FINRA for misrepresentation and unsuitable investments recommendation and the pending customer dispute on the same allegations.
The firm takes most cases of this type on a contingency fee basis and advances the case costs, and only gets paid for their fees and costs out of money recovered for clients. Attorney Alan Rosca, a securities lawyer and adjunct professor of securities regulation, has represented thousands of victimized investors across the country and around the world in cases ranging from arbitrations to class actions.
Investors who believe they lost money as a result of conducts related to Donald Woods’ suspension by FINRA for misrepresentation and unsuitable investments recommendation and the pending customer dispute on the same allegations, may contact attorney Alan Rosca for a free no-obligation evaluation of their recovery options, at 888-998-0530, via email at arosca@rscounsel.law, or through the contact form on this webpage.