October 30, 2020 – A finance industry regulator, Financial Industry Regulatory Authority (FINRA), has barred former NBP Financial Group advisor Cynthia Cowden (née Case) from the securities industry for recommending unsuitable high-risk investments to at least three senior clients.
FINRA alleged that Ms. Cowden’s elderly clients called in to FINRA’s Senior Helpline to report the unsuitable recommendations. After an investigation, Cowden accepted FINRA’s letter of Acceptance, Waiver and Consent and was barred indefinitely from advising investors.
Girard Bengali, APC, is currently investigating claims against Ms. Cowden and her former employer, NBP Financial Group, LLC. All brokerage firms, including NBP Financial Group, LLC have a legal responsibility to adequately supervise employees to ensure its brokers do not recommend or sell unsuitable investments to its customers. If you have investments with Cynthia Cowden (represented by Reif Law Group, P.C.) or NBP Financial Group, LLC you may be entitled to damages. Contact the securities litigation attorneys at Girard Bengali, APC, today to schedule a confidential consultation.
Unsuitable Investments and False Testimony to Regulators
According to Ms. Cowden’s BrokerCheck, Ms. Cowden recommended the purchase of $231,200 of NorthStar Real Estate Income Trust (REIT), a non-traded financial product, to a retiree couple,. FINRA found that “[t]he investment’s illiquidity and high-risk level also far exceeded the couple’s moderate risk tolerance.” Another customer was pitched a $250,000 stake in a speculative, high-risk, closed-end mutual fund. The total sum of this investment amounted to more than half of the customer’s net worth, and as such was determined to be an “unsuitable concentration” of net worth.
Even more disturbingly, according to FINRA, Cowden gave false testimony to FINRA about the customers’ total assets and income. “Specifically, Cowden falsely testified that the three customers’ assets and income were far in excess of the actual amounts.”
Girard Bengali, APC is aware of and currently investigating claims against Ms. Cowden for recommending and selling other unsuitable Alternative Investments known as Benefit Street Partners Realty Trust (BDCA), a non-traded REIT and American Finance Trust Inc. (AFIN), a publicly traded REIT, to her clients, including elderly investors.
Non-Traded REITs Are a Risky Business
A REIT is a form of real estate investment that is designed to reduce or eliminate tax liability while providing returns on real estate. Non-traded REITs are not listed on public exchanges and are marketed to provide retail investors access to inaccessible real estate investments with tax benefits. Since non-traded REITs do not trade on a securities exchanges, they can be illiquid for long periods of time.
“Illiquidity” is another way of saying that there is no market for the security, because there are very few buyers and sellers. The consequence for the investor is that they may pay a high premium when they buy and either cannot sell the investment, or may be forced to sell at a significant loss when they want to exit the investment.
When Cowden recommended the $231,200 REIT investment to her clients, she breached FINRA’s rules, because “[t]he investments were not suitable given the couple’s investment objective, circumstances, and financial needs.” Financial Advisors must take these elements into account when determining whether investments are suitable for an investor on an individual basis.
IF YOU LOST MONEY WITH CYNTHIA COWDEN OR NPB FINANCIAL GROUP, LLC PLEASE CONTACT US AT 323-302-8300 FOR A FREE AND CONFIDENTIAL EVALUATION OF YOUR CASE.