REIT and Tenants-in-Common Fraud and Negligent Supervision FINRA Arbitration and Litigation Attorney, Russell L. Forkey, Esq.
Paul Leon White II (CRD #4669396, Registered Representative, Huntington, New York) submitted an Offer of Settlement in which he was barred from association with any FINRA member in any capacity. Without admitting or denying the allegations, White consented to the described sanction and to the entry of findings that he recommended that a customer invest in non-listed real estate investment trusts (REITs) and a tenants-in-common (TIC) interest in undeveloped rural real estate without a reasonable basis to believe that the recommendations were suitable for the customer based on the customer’s financial status and investment objectives, and the customer’s need for liquidity, preservation of capital, ready access to cash, and safety of principal. The findings stated that the customer instructed White to sell the REITs and White acknowledged receipt of the sell instructions and informed the customer to expect to receive a check for the sale proceeds within one to two weeks, but later refused to process the sell orders. The findings also stated that White participated in the sale of TIC interests totaling $3,700,000, outside the course or scope of his employment with his firm and collected selling compensation of approximately $1,653,958 but failed to provide his firm with prior written notice describing the proposed transactions. (FINRA Case #2009017798201).