Erez Law recently filed a FINRA arbitration against Axa Advisors, LLC for losses due to unsuitable investments in Corporate Capital Trust, Inc. and Northstar Real Estate Income Trust II.
The customers were clients of Andrew Krakauer (CRD #1613159), who has been a registered representative of Axa Advisors, LLC in Woodbury, New York since 1987.
The Erez Law clients allege the following in the newly filed FINRA claim:
Krakauer recommended that the clients invest in two non-traded alternative investments: Corporate Capital Trust, Inc. and Northstar Real Estate Income Trust II. It is alleged that Krakauer represented that CC Trust and Northstar Trust pay a consistent “guaranteed” 7% dividend or slightly higher if reinvested and are safer investments than investing in a stock portfolio. He told the clients that they were investing in high-quality real estate. Krakauer further represented that the investments had a solid track record and had never sustained losses in the past 10 years. Krakauer represented that the investments were safe and low risk. He further represented that the investments could not be sold for five years. Krakauer did not disclose any risks when he solicited the investments.
In describing real estate programs, firms must ensure that their communications accurately and fairly explain how the products operate. Descriptions of real estate programs in communications need to be consistent with representations in the program’s current prospectus.
Erez Law alleges that Krakauer’s recommendations to invest in Corporate Capital Trust, Inc. and Northstar Trust were unsuitable. Corporate Capital Trust, Inc. and Northstar Trust were unsuitable, high risk and illiquid alternative investments.
Corporate Capital Trust, Inc. was a non-traded business development company (BDC) that made loans to middle-market businesses. Corporate Capital Trust, Inc. went public in November 2017. In December 2018, Corporate Capital Trust, Inc. merged with FS Investment Corp. and the new entity is FS KKR Capital Corp. FS KKR Capital Corp. now trades at approximately $5.97 a share.
Northstar Trust was a non-traded real estate investment trust (REIT) that invested in real estate debt. In January 2017, Northstar Trust merged into Colony Northstar Credit Real Estate, Inc., a publicly-traded company that changed its name to Colony Credit Real Estate, Inc. Colony Credit now trades at approximately $14.33 a share.
According to the claim, Krakauer’s investment strategy to concentrate each account in two non-traded alternative investments was also unsuitable.
It is alleged that Krakauer’s strategy of concentrating the clients’ accounts in two non-traded alternative investments was motivated by an exceptionally high commission.
It is alleged that Krakauer failed to recommend an adequately diversified and suitable portfolio. A reasonably designed and professional portfolio would have produced a significant positive return during the same period of time rather than losses.
Erez Law represents investors in the United States for claims against brokers and brokerage firms for wrongdoing. If and have experienced investment losses, please call us at 888-840-1571 or complete our contact form for a free consultation. Erez Law is a nationally recognized law firm representing individuals, trusts, corporations and institutions in claims against brokerage firms, banks and insurance companies on a contingency fee basis.