SEC Obtains $7 Million Final Judgment and Bars First Capital REIT CEO from the Securities Industry
The White Law Group continues to investigate potential claims involving broker dealers who may have unsuitably recommended First Capital Real Estate Trust to investors. The firm has received numerous calls from investors who are concerned about investment losses in the high risk, non-traded REIT.
According to a press release on July 21, 2021, the United States District Court for the Southern District of New York reportedly entered consent judgments against a CEO and board chairman and his entities, First Capital Real Estate Investments, LLC and First Capital Real Estate Advisors LP, as well as against First Capital Real Estate Trust Inc., for alleged fraud. The SEC also reportedly barred the CEO from the securities industry.
According to the SEC’s complaint, filed on December 13, 2019, the CEO and his entities allegedly engaged in two separate frauds relating to two public companies, First Capital Real Estate Trust Inc. (First Capital), which was also charged in the complaint, and a business development company (BDC).
The SEC alleges that First Capital and the CEO made material misrepresentations and omissions concerning the REIT’s ownership of 12 hotels in several Forms 8-K. The CEO also purportedly acquired an interest in the BDC’s external adviser and then allegedly caused the BDC to make two $1.5 million loans to an entity that he purportedly used for his own purposes.
The CEO and First Capital Real Estate Investments, LLC agreed to pay, on a joint and several basis, $3.2 million in disgorgement and $676,400 in prejudgment interest, and further agreed to pay a civil monetary penalty of $3.2 million. Finally, the CEO consented to a bar for a period of 10 years from acting as an officer or director of a public company, according to the press release.
Broker dealers are required to perform adequate due diligence on any investment they recommend. They must ensure that all recommendations are suitable for the investor. Recommendations should be in line with the investor’s age, risk tolerance, net worth, and investment experience.
If brokerage firms fail to adequately disclose risks or make unsuitable investment recommendations can be held liable for investment losses.
Potential Lawsuits to Recover Financial Losses
If you are concerned about your investment in First Capital Real Estate Trust Inc. and would like to speak to a securities attorney about the potential to recover your investment losses, please call The White Law Group at 1-888-637-5510 for a free consultation.
For more information on the firm’s investigation, please see:
The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois. For more information on The White Law Group, visit www.whitesecuritieslaw.com.