National investment loss lawyers KlaymanToskes issues notice to current and former customers of Kestra Investment Services broker/investment advisor Pamela Sue Espinosa (CRD# 5865661) following the filing of a customer complaint alleging $1 million in damages due to unsuitable private investments, high excessive commissions, and cross trading. The financial products involved include Direct Participation Plans (DPP) & Limited Partnership (LP) Interests.
According to FINRA BrokerCheck, Pamela Sue Espinosa (a/k/a Pamela Sue Davis) was previously registered as a broker/investment advisor with SII Investments, Inc. in Albuquerque, NM. In August 2017, SII Investments was sold to LPL Financial. Espinosa’s customer complaint is currently pending against SII/LPL Financial and was filed on January 18th, 2023.
Investors that suffered losses with Pamela Sue Espinosa may be entitled to a financial recovery. Contact attorney Lawrence L. Klayman immediately at (888) 997-9956 or lklayman@klaymantoskes.com for a free consultation to discuss your legal options. We do not collect attorney’s fees unless we are able to obtain a financial recovery for you.
As defined by FINRA (Financial Industry Regulatory Authority), a Direct Participation Program is “a program which provides for flow-through tax consequences regardless of the structure of the legal entity or vehicle for distribution,” including, but not limited to:
DPPs are generally organized as a partnership whereby the investors or “limited partners” deliver their funds to a “general partner” who invests the pooled capital for the benefit of the group. DPP investors may gain tax benefits as a result of its business structure, however, they also generally require that potential investors meet certain net worth requirements. While DPPs may provide investors with high returns and tax advantages when managed correctly, investors in DPPs may face severe losses as a result of poor management.
Many investors may be encouraged to invest in DPPs for the passive income they can potentially generate. However, DPPs are considered illiquid due to not being traded on a market exchange. Typically when investors buy into DPP’s, they are unable to liquidate until their target maturity date. In turn, DPPs are likely only suitable for investors who can afford to have their funds tied up for long holding periods, sometimes decades. Investors who want to withdraw their funds early may face high and unexpected fees.
Brokerage/advisory firms and their registered representatives may be held liable for DPP & LP Investment losses under the the Securities Act of 1933 and the Financial Industry Regulatory Authority’s (“FINRA”) Rule 2310. This rule includes the requirement for brokers/advisors to provide their customers with the per share estimated value of their DPP or REIT investment in a yearly report.
According to the Securities and Exchange Commission’s (“SEC”) Fixed Income Principal and Cross Trades Risk Alert, a “cross trade” occurs when a broker/financial advisor affects a trade between two or more of their advisory clients’ accounts, but does not charge a fee for effecting the transaction. An “agency cross trade” occurs when a broker/investment advisor arranges for a trade to be executed between a client and another party.
Additionally, “an adviser that arranges for a security to be purchased from or sold to a client from its own account – as opposed to purchasing or selling the security in the secondary markets – is engaging in a ‘principal trade’.” According to the SEC, brokers/financial advisors that enter their clients into principal and cross trade transactions have a number of legal obligations under the Investment Advisers Act of 1940.
Investors that suffered losses at Kestra Investment Services or SII Investments/LPL Financial with Pamela Sue Espinosa (a/k/a Pamela Davis) and/or any other broker/financial advisor, are encouraged to contact securities attorney Lawrence L. Klayman at (888) 997-9956 or lklayman@klaymantoskes.com for a free consultation. We do not collect attorneys fees unless we are able to obtain a financial recovery for you.
KlaymanToskes is a leading national securities law firm which practices exclusively in the field of securities arbitration on behalf of retail and institutional investors throughout the world in large and complex securities matters. The firm has recovered more than $250 million for investors in FINRA arbitrations and over $350 million in other securities litigation matters for its clients. KlaymanToskes has office locations in California, Florida, New York, and Puerto Rico.
KlaymanToskes, P.A.
Lawrence L. Klayman, Esq.
888-997-9956
lklayman@klaymantoskes.com
www.klaymantoskes.com