Erez Law recently filed a FINRA arbitration against NFP Advisor Services, LLC. Their customer alleges that Kurt Jackson (CRD #2913769) made unsuitable investment recommendations in illiquid investments, including those in the high risk energy sector.
According to the filed claim, the widow and mother of two children, entrusted Jackson and NFP with her irreplaceable savings from her late husband’s life insurance. The money was intended to provider for herself and her children. The unsophisticated investor informed Jackson that she was not interested in high risk investments or strategies and could not afford to lose her irreplaceable savings.
Erez Law alleges that Jackson employed a speculative and unsuitable investment strategy of dangerously concentrating Dawn’s portfolio in risky illiquid investments with unacceptable results.
In December 2013, Jackson used aggressive and high-pressure sales tactics to solicit the Erez Law client to invest $100,000 each in Atlas Resources Series 33-2013 L.P. (“Atlas Resources”) and Penneco Drilling Associates 2013-1 L.P. (“Penneco Drilling”). Atlas Resources and Penneco are speculative, illiquid and unsuitable private placements from the volatile energy sector. These securities are also exempt from registration with the SEC. Jackson represented to the client that Atlas Resources and Penneco Drilling were high-quality investments that paid a good yield and would provide tax advantages while preserving her principal.
Financial advisors who sell private placements are often motivated to sell these investments by large commissions. In fact, other than the rich commission that Jackson earned, there was no rational basis to recommend that the client invest a significant percentage of her portfolio in high risk, and illiquid private placements.
Erez Law alleges that Jackson failed to adequately disclose to DAWN that Atlas Resources and Penneco were illiquid investments, that she could lose most of her investment and that her distributions could diminish significantly and/or cease altogether.
Jackson also recommended and sold DAWN several other high risk, unsuitable and often illiquid investments including:
- Atlas Resources Series 33-2013 L.P.
- Penneco Drilling Associates 2013-1, L.P.
- Steadfast Apartment REIT
- Skybridge Multi-Adv Hedge Fund Portfolio, LLC Series G
- Atlas Growth Partners, L.P.
- CION Investment Corp.
- FS Energy and Power Fund
- Griffin America Healthcare REIT
It is alleged that Jackson recommended the Erez Law client dangerously concentrate her portfolio in speculative, unsuitable and illiquid investments. By dangerously concentrating the former client’s capital in risky and illiquid investments, Jackson needlessly exposed her to extreme liquidity risk, in addition to the already significant risks associated with the individual investments Jackson recommended and sold to her.
Jackson’s reckless and unsuitable strategy needlessly exposed his former client to the risks associated with energy sector companies that were vulnerable to the same adverse market conditions and ultimately resulted in significant losses to her irreplaceable savings. The Erez Law client’s losses could have easily been avoided had Jackson simply followed the basic investment principle of diversification.
Jackson’s reckless and self-serving investment strategy significantly increased the risks to which the client was unknowingly exposed. There was no reasonable basis for dangerously concentrating the client’s savings in high risk, unsuitable and illiquid investments or the volatile energy sector.
Jackson also failed to adequately disclose the enormous degree of risk, including liquidity risk and sector concentration risk, associated with the reckless investment strategy he employed in his former client’s portfolio. By failing to adequately disclose the enormous risks associated with his reckless investment strategy, Jackson deprived the client of her fundamental right to make an informed decision about her investments.
Furthermore, Jackson failed to obtain the client’s required authorization before executing transactions in her account, thus these transactions were unauthorized.
Additionally, Jackson recommended and sold the client an unsuitable life insurance policy, which required the client to pay an annual premium of more than $7,000 per year. Jackson assured the client that the income generated from her investments would be more than sufficient to pay the premium on the life insurance policy he recommended and sold to her. The investments Jackson recommended and sold to the client, including the life insurance policy, paid Jackson significant commissions.
Several of the illiquid and unsuitable investments Jackson recommended and sold to the client have ceased paying dividends or seen their dividends dramatically reduced. The client was also unable to continue paying the high annual premium on the policy that Jackson recommended and sold to her and was forced to let the policy lapse.
Whenever the client questioned Jackson about the activity or performance of her accounts, Jackson belittled her understanding of her investments and chastised her for questioning his handling of her investment portfolio.
Regrettably, the client followed Jackson’s advice to their severe detriment, causing her to suffer devastating significant losses to her irreplaceable principal.
Jackson is currently registered with Commonwealth Financial Network in San Diego, California since 2015. Previously, Jackson was registered with NFP Advisor Services, LLC in San Luis Obispo, California from 2008 to 2015.
In addition to the case above, Jackson has been the subject of two additional customer complaints, in 1999 and 2003, one of which was closed without action according to his CRD report.
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.
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