Posts tagged ‘Commonwealth Capital Securities investigation’
The White Law Group continues to investigate the sale of Commonwealth Income & Growth Funds I-VIII by broker-dealers, including Commonwealth Capital Corp., that may have failed to perform adequate due diligence when recommending this investment to clients.
According to their website, Commonwealth Capital Corp., is an equipment leasing and financial services company that was founded in 1978 and is located in Pennsylvania. Commonwealth specializes primarily in information technology, medical technology, and telecommunications equipment and “offers one of the only Information Technology specialized public Alternative Investment funds in the U.S.”
The trouble with alternative investments, like the offerings in Commonwealth Income & Growth Funds, is that they involve substantial risk and are generally illiquid investments.
According to the form S1 filed with the Securities and Exchange Commission, Commonwealth Income & Growth Fund II “expects that there will be no public or private market for the Units; due to this lack of liquidity, Limited Partners must be prepared to hold their Units for the life of the Partnership and Limited Partners will be able to sell their Units, if at all, only at a substantial discount.” This makes these types of investments ill suited for retired individuals or individuals with limited income that may need access to their money for unexpected medical or living expenses.
In addition to the high risk and illiquid nature of Income & Growth Funds, extremely high sales commissions are associated with these investments. For example, Commonwealth Income & Growth Fund V, according to their registration from filed with the Securities and Exchange Commissions “will pay Commonwealth Capital Securities Corp., as the dealer manager, an underwriting commission of up to 10.0% of the capital contributions.” Unfortunately, these high commissions can potentially provide incentive for unscrupulous broker-dealers to down play the risks and push the sale of Commonwealth Funds onto unsuitable investors.
To make matters worse, according to Investment News, Commonwealth Capital Securities Corp., owner and chief executive, Kimberley Springsteen-Abbott, has been accused by the Financial Industry Regulator Authority (FINRA) of misusing approximately $345,000 of investors money between 2008 and 2012. According to the FINRA complaint, Ms. Springsteen-Abbott “directed the misuse of investor funds to pay for various American Express credit card charges that were not related to legitimate business purposes of the funds.” The charges included $1,971.11 for a family vacation to Florida and a $12,414 for board of directors meetings.
Broker-dealers have a legal obligation to act in the best interest of their clients and have to demonstrate adequate due diligence on an investment before recommending the investment to a client. Furthermore, recommendations should be consistent with an individual’s age, risk tolerance, financial objectives, and investment knowledge.
Broker-dealers that have not done their fiduciary duty or adequately disclose the risks when selling investments may be held liable for damages lost through FINRA arbitration claims.
If you have suffered losses in a Commonwealth Income & Growth Fund investment and would like to discuss your litigation options, please call The White Law Group at 312-238-9650 for a free consultation.
The White Law Group is a national securities fraud, securities arbitration, and investor protection law firm with offices in Chicago, Illinois and Boca Raton, Florida.
For more information on The White Law Group, visit http://whitesecuritieslaw.com.