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Florida FINRA Arbitration Panels Awards Investor More Than $150,000 Compensation in Real Estate Investment Trust (REIT) Case

On December 11th, 2018, a FINRA Arbitration panel in Boca Raton, Florida issued a decision in favor of a claimant in a dispute filed regarding investment losses sustained in real estate investment trusts (REITs). The claim was filed against Crystal Bay Securities, Inc. (CRD#: 142339), a brokerage firm based in Delray Beach and that is licensed to operate in 9 U.S. states and territories. In addition, registered broker Rafael Golan (CRD#: 1074079) was named as a respondent in the case. Here, our Miami FINRA arbitration attorneys provide an overview of the allegations raised against this broker and this brokerage firm.

The Cause of Action: Exploitation of Vulnerable Adult, Broker Negligence 

Some aspects of a FINRA arbitration hearing are confidential. As a result of this, many of the specific details of the case do not become part of the public record. That being said, the causes of action raised by an investor are typically noted when an award is granted. In this case, the claimant raised several causes of action against Crystal Bay Securities and Rafael Golan, including:

  • Breach of fiduciary duty;
  • Exploitation of a vulnerable adult;
  • Violation of Florida securities law; and
  • Broker negligence.

The financial products at issue in this proceeding were a form of alternative investment commonly known as a real estate investment trust (REIT). REITs are not appropriate for the majority of ordinary investors, especially for people who are looking for safe, conservative investment products. Brokers have a duty to avoid making unsuitable investment recommendations. 

The Award: Rescission of Four Unsuitable Investments  

The FINRA Arbitration Panel awarded the investor in this case $136,201.82 in statutory damages. In addition to this, the panel noted that the investor is entitled to the rescission of certain investments offered by the brokerage firm. Specifically, the panel allowed for the rescission of the following four REIT securities: ARC Global Trust, Business Development Corp. of America, ARC Realty Finance Trust Inc., Center REIT I Inc. In total, nearly 25,000 shares of these securities were permitted to be rescinded.

Punitive Damages Were Awarded

Above and beyond the compensatory damages awarded by the FINRA panel, punitive damages were also granted to the investor. Crystal Bay Securities and Rafael Golan were held jointly liable for $25,000 in punitive damages. Punitive damages are awarded for exceptionally bad conduct. This compensation is not tied directly to investor losses. While not awarded often, FINRA panels do have the legal authority to award punitive compensation when appropriate.

Speak to Our Miami FINRA Arbitration Lawyers Today

At Carlson & Associates, P.A., our law firm fights for investors in South Florida. If you lost money in unsuitable REITs or any other type of complex investment product, we are ready to help you hold a negligent financial advisor or a negligent brokerage firm legally accountable. To set up a free review of your securities fraud or investment fraud claim, please contact our Miami office today.

Resources:

brokercheck.finra.org/individual/summary/1074079

finra.org/sites/default/files/aao_documents/18-00218.pdf

brokercheck.finra.org/firm/summary/142339

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