Did You Buy REITs or BDC’s From Gihan Fernando?

Naples, FL., — Vernon Litigation Group, based in Naples, Florida is investigating claims involving recommendations made by former BOK Financial Services broker Gihan Fernando (CRD#4469669). According to FINRA’s BrokerCheck CRD website, Mr. Fernando is the subject of at least 45 reportable disclosures. The overwhelming majority of the customer complaints involve the sale of Real Estate Investment Trusts (REITs) and Business Development Companies (BDC’s). REITs and BDCs are speculative investments that pay astronomical commissions and are highly illiquid. FINRA refers to REITs and BDC’s as NCI’s, Non-Conventional Investments or Alternative Investments, and has specifically reminded firms such as BOK in Notice to Members 03-71 that:

Given the complex nature of NCIs and the potential for customer harm or confusion, members are cautioned to ensure that their sales conduct procedures fully and accurately address any of the special circumstances presented by the sale of NCIs. Additionally, the National Association of Securities Dealers (NASD) is concerned that investors, particularly retail investors, may not fully understand the risks associated with these products.

FINRA went on to remind members offering Non-Conventional Investments such as REITs, BDC’s, and other alternatives of their obligations to: (1) conduct adequate due diligence to understand the features of the product; (2) perform a reasonable-basis suitability analysis; (3) perform customer-specific suitability analysis in connection with any recommended transactions; (4) provide a balanced disclosure of both the risks and rewards associated with the particular product, especially when selling to retail investors; (5) implement appropriate internal controls; and (6) train registered persons regarding the features, risks, and suitability of these products.