FINRA’s complaint focuses on several areas of potential misconduct. With respect to VFG, FINRA alleged that its supervisory systems were inadequate in two material aspects. First, VFG through Vanclef provided consolidated investment reports to customers during in-person meetings to discuss their investments, yet VFG failed to supervise the content of those reports. Second, VFG failed to reasonably supervise the overall concentration of illiquid alternative investments, including non-traded DPPs and non-traded REITs, in customers’ accounts to ensure that customers did not become overly concentrated in illiquid securities.
With respect to Vanclef, FINRA’s complaint focuses on a book named The Wealth Code: How the Rich Stay Rich in Good Times and Bad ("The Wealth Code"), a book Vanclef wrote and published himself, to customers and the general public. According to FINRA, Vanclef used the book as sales literature to promote the DPPs, non-traded REITs and to attract customers to VFG. FINRA alleged the Wealth Code contained numerous inaccuracies, misleading statements and contradicted information provided in the prospectus for the investments Vanclef and VFG sold.
Based upon the foregoing misconduct, FINRA alleges VFG and Vanclef violated NASD Conduct Rules 2210(d)(1)(A), (B) and (D) and 3010, as well as FINRA Rules 2010. NASD Rule 3010 states that a brokerage firm owes a duty to all of its clients to monitor and supervise its employees properly. The rule states: “[e]ach member shall establish and maintain a system to supervise the activities of each registered representative…that is reasonably designed to achieve compliance with applicable securities laws and regulations…”
Lufrano Law, LLC is a national securities litigation firm and has experience representing investors who have investment disputes with brokers and broker-dealers. If you suffered investment damages investing with Vanclef in DPPs or REITs through VFG, you may be able to recover your losses through FINRA arbitration. Our firm only receives a fee if you recover money. Please contact one of our attorneys at (800) 627-2179 to schedule a free consultation or complete our free case evaluator.