Silver Oak Securities

Date:

August 18, 2020

Type of alert:

Unsuitable Recommendations  

On November 18, 2020, the law firm ChapmanAlbin LLC filed suit against Silver Oak Securities for selling three non-traded real estate investment trust (REIT) investments to a Connecticut investor causing $80,000 in damages. According to the lawsuit, Silver Oak’s registered representative, Heath Grossman, recommended the high-risk, illiquid investments. Mr. Grossman was a registered representative at Silver Oak from 2012-2017 and has been an advisor at Johnson Brunetti from 2014-Present.

According to the lawsuit filed before the Financial Industry Regulatory Authority (FINRA), Heath Grossman recommended the Connecticut retiree invest in FS Investment Corp III, Steadfast Apartment, and American Realty Capital Healthcare Trust REITs in 2015. This is not the first time Silver Oak and Mr. Grossman have had actions filed against them for improper sales of alternative investments including REITs. According to their web CRDs available on FINRA’s Brokercheck website, in the past a regulatory proceeding was filed against Silver Oak involving irregularities and deficiencies related to the sale of alternative investments including concerns regarding concentration levels and product suitability which resulted in a $35,000 fine and a cease and desist. Likewise, Mr. Grossman has had two customer disputes filed against him, one alleging he recommended four unsuitable non-traded REITs which was settled for $49,306.

According to the Connecticut investor’s complaint, he turned to Silver Oak for financial assistance in managing his retirement assets. He had limited investment experience in the market and no experience with REITs. He relied upon Silver Oak and Mr. Grossman to provide him with a suitable investment portfolio consistent with his goals of moderate growth, capital appreciation, and income. Instead Silver Oak overconcentrated his investment portfolio with three REITs which were high risk, illiquid investments. The complaint further alleges, the only reason for making such a reckless and irresponsible investment recommendation to a someone like the Connecticut investor was for Silver Oak and its brokers to profit. The investor expected Silver Oak and its brokers to look out for his best interests. Instead, they put their own self-interest ahead of his. Most non-traded REIT companies will pay 10% or more in commissions, fees, and other incentives to dump their products on unsuspecting investors.

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