VFG Securities Settles Claims With FINRA

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VFG Securities Settles Claims With FINRA

VFG Securities Inc., a small broker-dealer, and its owner, Jason Vanclef, reached a settlement agreement with FINRA regarding allegations that he and the firm had customers overly concentrated in illiquid investments and had used a book he had written to pump up these alternative investments. FINRA had filed a complaint claiming that the firm failed to supervise its brokers to ensure that customers’ portfolios would not become overly concentrated in illiquid investments.

Between November 2010 and June 2012, nearly 95% of VFG Securities’ revenue was obtained through the sale of nontraded REITs and other direct participation programs, which are illiquid assets for retails investors, FINRA said. FINRA further accused Vanclef of using a book he had written, “The Wealth Code,” as sales literature to promote investments in nontraded REITs and DPPs “to lure” potential investors to VFG Securities.

Vanclef “repeatedly claimed in ‘The Wealth Code’ that nontraded DPPs and nontraded REITs offer both higher returns and capital preservation,” according to the settlement. “This claim was inaccurate and misleading, and contradicted information provided in the prospectuses for the instruments that Vanclef and VFG sold. Nontraded DPPS and nontraded REITs are speculative investments that contain a high degree of risk, including the risk that an investor may lose a substantial portion or all of his or her initial investment.”

At the time of the complaint, Vanclef stated that FINRA had been “persecuting” him since a 2012 exam, when FINRA started to focus on the firm selling illiquid alternative investments. He further claimed that FINRA’s investigation was an attempt at “character assassination.”

In settling the matter with FINRA, Vanclef was suspended from the securities industry for 10 days, and VFG Securities was fined $50,000 — $10,000 of which was jointly with its owner, Vanclef.

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