Jason B. Vanclef, of Culver City, California, a stockbroker currently registered with VFG Securities, Inc., was charged by Financial Industry Regulatory Authority (FINRA) Department of Enforcement in a Complaint alleging that Vanclef made investment recommendations to customers based upon false and misleading statements. Department of Enforcement v. Jason Bryce Vanclef, No. 2013038283001 (Feb. 9, 2016).
According to the Complaint, from September 22, 2009 to January 21, 2013, Vanclef and his firm disseminated a book, The Wealth Code, written by Vanclef. Apparently, Vanclef’s book was utilized for purposes of promoting investments in real estate investment trusts and direct participation programs. The Complaint alleged that the book was provided to customers through firm events, and Vanclef met with customers regarding it. The Complaint stated that sales of these non-traded real estate investment trusts and direct participation programs, as well as alternative investments, accounted for nearly ninety-five percent of the firm’s revenue from November of 2010 to June of 2010.
FINRA alleged that the statements made within The Wealth Code regarding the capital preservation and high returns associated with these products were misleading and inaccurate, and did not conform with information detailed in the non-traded real estate investment trust and non-traded direct participation program prospectuses. Particularly, FINRA alleged that such products carried significant risk of investors losing principal.
The Complaint also stated that Vanclef stated within his book that investors would be able to generate returns ranging from eight to twelve percent on a consistent basis. FINRA alleged that such remarks constituted unwarranted statements because they were based upon promised future returns and did not enable investors to be provided with a legitimate basis to evaluate Vanclef’s claims. FINRA also alleged that Vanclef’s book was not vetted through a firm principal, nor disclosed to FINRA as NASD rules required.
The Complaint further stated that Vanclef and his firm disseminated spreadsheets to four of the firm’s customers which contained recommendations for investments. These spreadsheets, per the Complaint, consisted of misleading and false timelines for liquidity pertaining to the non-traded real estate investment trusts and non-traded direct participation programs. Particularly, the spreadsheets containing the recommendations reportedly characterized the products incorrectly as income based investments within the spreadsheets, and the spreadsheets made faulty projections concerning the investments’ performance.
The Complaint also alleged that the firm’s supervisory systems were deficient. Particulalry, the firm and Vanclef provided customers with investment reports in the course of meeting with customers; however, the firm never supervised the report’s content to make sure that customers had updated valuations pertaining to investments purchased. VFG also reportedly did not supervise recommendations made to customers pertaining to illiquid alternative investments to make sure that customers did not have their assets overly concentrated in such products.
FINRA found that the Vanclef and VFG’s conduct was violative of FINRA Rule 2010, as well as 2210(d)(1)(A), 2210(d)(1)(B), and 2210(d)(1)(D). FINRA found that the firm’s conduct was also violative of NASD Rules 3010(a), 3010(b), 2210(b)(1)(A), and 2210(c)(2).
FINRA Public Disclosure reveals that Vanclef has been subject to six customer initiated investment related arbitration claims. Particulalry, on November 10, 2009, a customer initiated investment related arbitration claim involving Vanclef’s conduct was settled for $600.00 in damages based upon allegations that Vanclef overcharged the customer within the customer’s fee based account.
On June 27, 2012, a customer initiated investment related arbitration claim involving Vanclef’s conduct was settled for $100,000.00 in damages based upon allegations that Vanclef made unsuitable investment recommendations to the customer regarding six securities purchases. On January 28, 2013, a customer initiated investment related arbitration claim involving Vanclef’s conduct was settled for $107,000.00 in damages based upon allegations that Vanclef omitted facts to the customer concerning investment risks, and made unsuitable investment recommendations.
On March 28, 2013, another customer initiated investment related arbitration claim involving Vanclef’s conduct was settled for $7,590.00 in damages based upon allegations that Vanclef made omissions and misrepresentations to the customer concerning real estate investment trusts and private placement investments, and made unsuitable investment recommendations regarding such products.
On December 25, 2013, a customer initiated investment related arbitration claim was settled for $237,500.00 in damages based upon allegations that Vanclef, while registered with Madison Avenue Securities, breached his fiduciary and contractual obligations to the customer, and negligently handled the customer’s investment account.
Guiliano Law Group
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