Former Accelerated Capital Group Customers Win $175,000 FINRA Arbitration for Losses from Investments in ACF Notes
Posted on Thursday, July 6th, 2017 at 9:02 am
In June 2017, former clients of Accelerated Capital Group won an award in a FINRA arbitration for compensatory damages of $58,333 and $116,667 for losses sustained from investments in the Aequitas Commercial Finance Secured Subordinated Promissory Notes (“ACF Notes”). The investors were clients of financial advisors Aaron Brodt (CRD# 5017914), Wayne Miller (CRD# 4813645) and Janet Ross (CRD# 4381729). Also part of the settlement, the records of Miller and Ross were expunged; Brodt’s expungement request was denied.
Aequitas Commercial Finance is a limited liability company (LLC) that offered ACF Notes, private placements that are high risk investments that lack liquidity and regulatory oversight. According to a Securities and Exchange Commission (SEC) complaint from March 2016, ACF notes were typically offered on one to four year terms with interest rates generally between 5 and 15 percent.” It continued, “By at least July 2014, Jesenik and Oliver knew that redemptions and interest payments to prior investors were being paid primarily from new investor money in a Ponzi-like fashion, and that very little investor money was being used to purchase trade receivables. The cash flow shortages at ACF and Aequitas Holdings continued with increased severity through 2015. Rather than change the business to reduce expenses or increase operating income, Jesenik and Oliver decided to cover the cash shortfall – and continue paying the growing expenses of the enterprise, including their own lucrative salaries, a private jet and pilots, and dinners and golf outings for prospective investors – by raising funds from new investors and convincing prior investors to reinvest. Between January 2014 and January 2016, they raised approximately $350 million through ACF and the Aequitas Funds.” The complaint also alleged, “By the beginning of 2016, the balance on the loan exceeded $180 million and the Aequitas enterprise began to collapse. ACF announced it could no longer meet its obligations to investors, and the Aequitas companies announced layoffs of approximately 80 of their 120 employees. In early February 2016, they hired a consulting firm to conduct an orderly wind-down of the business.”
The causes of action included violation of the Arizona Securities Act §§ 44-1801 et seq. and §§ 44-3101 et seq.; negligence; breach of fiduciary duty; conflict of interest and misrepresentations and omissions. The FINRA arbitration hearing was conducted in Phoenix, Arizona.
Brodt has been registered with Peacap in Scottsdale, Arizona since July 2016. Previously, he was registered with Accelerated Capital Group in Scottsdale, Arizona from February 2012 to May 2016. Brodt has also been the subject of two additional customer complaints, one of which was closed without action, according to his CRD report:
May 2017. “Claimants are alleging negligence, over-concentration, breach of fiduciary duty.” The customer is seeking $340,000 in damages.
Pursuant to FINRA Rules, member firms are responsible for supervising a broker’s activities during the time the broker is registered with the firm. Therefore, Accelerated Capital Group may be liable for investment or other losses suffered by Brodt’s customers.
Erez Law represents investors in the United States for claims against Accelerated Capital Group regarding losses sustained from investments in the Secured Subordinated Promissory Notes. If you were a client of Accelerated Capital Group or another firm, 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.