Customers File Complaints Accusing Alternative Investments Broker Dennis Haywood II of Providing Unsuitable Advice to Invest in Non-Traded REITs and BDCs
At least six customers have filed disputes against Florida broker Dennis Michael Haywood II since April 2020, according to the Financial Industry Regulatory Authority, Inc. (FINRA) Brokercheck Report currently under review by investor rights lawyer Alan Rosca. The broker’s former customers allege that he breached his fiduciary duty and exhibited a lack of proper due diligence and suitability in handling their investments. The four customers have reported a collective loss of over $800,000.
Investor rights lawyer Alan Rosca and his Rosca Scarlato LLC law firm colleagues often represent investors who have lost significant savings due to brokers’ alleged fiduciary duty breaches. He and his colleagues are currently investigating customer disputes filed against broker Dennis Haywood II’s customers during the past few months. Haywood II’s investors should consult with Alan Rosca or one of his firm’s other attorneys at 888-998-0530 or arosca@rscounsel.law to learn more about the potential remedies that may be available to them.
Dennis Haywood II Has Previously Worked for a Firm Expelled by FINRA
Haywood II currently works for two different Land O’ Lakes-based financial services firms. His affiliation with Purepath Wealth Management began in 2018. His employment with Crown Capital Securities, L.P., started in 2013.
The FINRA Brokercheck report shows that the alleged impropriety occurred at Crown Capital Securities L.P.
Haywood II was also previously affiliated with Newport Coast Securities, Inc., an Odessa, Florida-based investment firm from 2010 through 2013. FINRA revoked that firm’s membership in 2018.
Dennis Haywood II: Why Customers Allege He Breached His Fiduciary Duty
Haywood II’s FINRA Brokercheck report shows that two different customers filed disputes against him, alleging a lack of proper due diligence, suitability and breach of contract in April 2020. One customer reported $100,100 in losses for two alternative investments made in April 2018. Another Haywood II client reported a $400,000 loss associated with alternative investments he aided them in purchasing in between April 2014 and April 2016.
Two other Haywood II customers filed disputes with him in May of this year. The customers are alleging that he lacked suitability and violated his fiduciary duty to them.
In both instances, the customers allege that Haywood II recommended that they purchase a variable annuity contract and alternative investments, including non-traded real estate investment trusts (REITs) and business development companies (BDCs).
According to a FINRA Brokercheck report, one customer, who claims $250,000 in damages, alleges that Haywood II materially misrepresented the details about the liquidity of the funds contained in the investment instrument and the profitability and risks associated with it. The fourth customer, who claims $167,357.75 in damages, asserts that Haywood II misled them about projected performance returns on their investments, including the time horizon, or length of time they could expect to hold on to it.
Concerns Regarding Alternative Investments Broker Dennis Haywood II Allegedly Recommended to Investors
Alternative investments, such as REITs and BDCs that Haywood II allegedly recommended for customers to purchase, aren’t fraudulent, but they do carry with them advantages and risks.
REITs don’t get traded on public exchanges; brokers sell them instead. That means they are subject to much less scrutiny by investor watchdogs. Misconduct might pass unnoticed, and management may engage in practices that would not fly in publicly traded companies. There are often high upfront costs for purchasing non-traded REITs. The holding period for them can be as long as seven years or longer. This can make it hard to offload them.
Many investors purchase BDCs after being told that they may offer better returns than high-yield bonds can. However, BDCs can be quite volatile investments and are challenging to value, which contributes to a lack of liquidity since these aren’t publicly traded investments. The lack of transparency and scrutiny by market watchdogs could make it possible for management to cover misconduct or engage in questionable practices.
Although REITs and BDCs are lawful trades, they are typically highly risky, opaque investments. They often times benefit the issuer and the selling broker at the expense of the investor. Such investments could be unsuitable for many investors, especially many elderly investors. Investment advisers often appreciate the increased commission from selling a customer a REIT or BDC, and prey upon unsophisticated investors by concealing or glancing over risks associated with these products and touting dubious benefits. Recommending such investments to investors may affect a broker’s ability to uphold their fiduciary duty to the investor. A broker’s foremost responsibility when he or she acts in a fiduciary capacity is to protect an investor’s savings when making trade recommendations.
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.
What You Can Do If You Invested with Dennis Haywood II
Investor rights lawyers at Rosca Scarlato have decades of combined experience advocating on behalf of clients who have lost their savings after working with brokers who’ve engaged in alleged impropriety. Investor rights lawyer Alan Rosca is actively investigating customer disputes involving Dennis Michael Haywood II and is planning to pursue all legal remedies to recover compensation for investors who’ve suffered losses.
Dennis Haywood II investors should contact Rosca Scarlato for a free, no-obligation consultation to review their case and be informed about their rights. You should reach out to investor rights lawyer Alan Rosca and his colleagues at 888-998-0530, by email at arosca@rscounsel.law, or by filling in the contact form on this page to share any additional information about Haywood II’s activities.
