SagePoint Financial fined over $ 1 million


FINRA ordered SagePoint Financial to pay over $ 1 million in restitution to its clients in connection with early renewals of unit investment funds. Sagepoint Financial is one of many brokerage firms in the Advisor Group Network (in the same way FSC Securities, Royal Alliance Associates and Woodbury Financial Services). In total, the Advisor Group broker network includes some 7,000 investment professionals across the country.

Advisor Group also recently completed a merger with Ladenburg Thalmann Financial Services, Inc., which includes approximately 4,500 additional financial professionals registered nationwide with Securities America, Triad Advisors, Securities Service Network, Investacorp and KMS Financial Services.

Who is SagePoint Financial?

– Sagepoint Financial, Inc. according to FINRA Brokercheck has 25 separate disclosures (including 14 regulatory disclosures as of June 2020).

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– Sagepoint Financial has more than 800 branches and 1,800 investment professionals across the country.

What is Unit Investment Trust (UIT)?

An ITU is sold to investors as a unit or a fixed or closed portfolio of securities designed to end on a specific maturity date (usually between one and two years later).

The next set of ITU investments are generally offered and coincide with the maturity date of the preceding series, and generally have a similar investment objective or strategy.


When an investor sells an ITU, there are usually several levels of commissions and fees that incentivize the transaction: an upfront subscription fee (usually up to 1%), deferred sales charge (usually up to 2, 5%), and creation and development or similar costs (generally up to 0.5%). If the financial advisor recommends that an investor sell their ITU before the prescribed maturity date, and then move the funds to a new ITU, this leads to increased selling costs for the investor and raises suitability issues.

In an Acceptance, Waiver and Consent (AWC) where Sagepoint Financial did not admit or deny the Financial Regulatory Authority (FINRA) allegations, Sagepoint Financial agreed to pay $ 1.3 million in restitution (plus interest) investors who were recommended to trade early in the rollover of ITU investments, and FINRA further fined Sagepoint Financial $ 300,000 due to alleged oversight failures. FINRA alleged that Sagepoint Financial failed to establish and maintain an adequate and appropriate supervisory system and written supervisory procedures relating to monitoring the adequacy of recommendations to investors for early renewals of investment trust investments. unitary.

Dangers of non-traded REITs for investors

Earlier in 2020, Sagepoint Financial, in the midst of the Covid-19 crisis and its impact on financial markets, temporarily halted sales of non-traded Real Estate Investment Trust (REIT) securities.

Some brokerage firms look back to the financial crisis period of 2008-2009 and consider the business decision to allow continued sales of these products under these market conditions to be a mistake. However, the decision to temporarily suspend these sales can be criticized as being merely superficial, as it does not resolve the more substantial issues of sales practice, adequacy and supervision associated with these investment products, regardless of the conditions. of the market. Some of the explanations included references that the Covid-19 issues were causing difficulties in property valuations. However, the lack of transparency and lack of liquidity associated with these investments has not stopped financial advisers from selling billions of dollars of these investments. These types of investment products are rarely suitable for middle class investors.


In some cases, the recommended transactions are unsuitable, investment products are distorted, and investors end up with illiquid and risky investments that they do not even understand.

Many investors are down 40% or more in these investments, and others find attractive distribution income streams reduced or stopped altogether, causing investors further damage and financial problems. In some cases (often due to the high commissions and fees offered for selling these investments) they are oversold to investors who find themselves burdened with large illiquid positions concentrated in investment products no longer paying out distributions. illiquid and of decreasing value.

Non-traded real estate investment trusts (REITs) are generally considered “high risk” investments and recommending such investments to retirees and seniors can be problematic for financial advisors.

Potential disputes with FINRA clients

FINRA disputes involving early renewals of ITU or sales of non-traded REIT investments are not uncommon.

These disputes often include allegations related to multiple regulatory rule violations as well as negligence, negligent supervision, inadequacy and misrepresentation.

As for non-negotiated products REIT investments, disputes may also include other alleged violations of FINRA 2111 and FINRA 2010 rules.

FINRA Rule 2111 requires that the firm or associated person have a reasonable basis to believe that a recommended transaction or investment strategy is suitable for the client based on information obtained through due diligence on the part of the company or associated person to determine the client’s investment profile.

According to the North American Securities Administrators Association (NASAA, an organization that includes state securities regulators), issues raised by securities regulators regarding non-traded REIT investments can be observed in certain measures of law enforcement involving senior investors.

Initially, it seems that the game is often pitted against the investor who buys these investment products. There are often conflicts of interest, high commissions, high payout rates, and to overcome these hurdles it may require a 10-15-20% return just to get the investor back to balance. All the while, the prices are not coming from an active market for the stocks, but rather from the sponsor itself, as there are no national exchanges offering price transparency, let alone constant liquidity. for investors.

How to claim compensation for your investment losses SagePoint

If you are a Sagepoint Financial investor who has had premature UIT rollovers in your accounts or if you are a Sagepoint Financial investor who purchased non-traded REITs or shares of non-traded business development companies (BDCs) and you have suffered losses (or if you are aware of a retired or senior investor who has done the same), you should consider your potential options to recoup your investment losses.

A good option includes litigation with a FINRA client. The FINRA client litigation process is a private arbitration process that is quick and efficient compared to court litigation. In addition, there are usually no depositions, as this is almost entirely a discovery on paper. You should contact experienced lawyers who may be able to help you with these types of disputes.

About Haselkorn & Thibaut, PA

Haselkorn and Thibaut is a national law firm specializing in handling investment fraud and FINRA arbitration cases. The law firm has offices in Florida, New York, Texas and North Carolina. The two founding partners have nearly 45 years of legal experience.

Experienced attorneys in Haselkorn & Thibaut, PA are available for free consultation as a public service. Call today for more information at 1 888-628-5590 or visit


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