Investors Bring FINRA Arbitration Claims A For Breach Of Fiduciary Duty

Gary Arthur Forrest of Flint Michigan a stockbroker formerly registered with American Portfolios Financial Services is referenced in a customer initiated investment related arbitration claim where the customer sought $300,000.00 in damages supported by accusations of negligence and the breach of fiduciary duty by the stockbroker with respect to his sales of real estate securities when he was employed by American Portfolios. Financial Industry Regulatory Authority (FINRA) Arbitration No. 20-01123.

According to the claim, a contract between the customer and the securities broker dealer had been breached. Michigan Consumer Protection Act, Michigan Uniform Securities Act and federal securities laws had allegedly been violated by the stockbroker. The claim also alleges that the customer had been defrauded.

This is not the first time that Forrest has been involved in an investment related dispute. On August 7, 2018, a customer filed an investment related arbitration claim involving Forrest’s activities in which the customer requested $100,001.00 in damages founded on allegations of fraudulent unregistered securities being recommended to the customer. FINRA Arbitration No. 18-02406. The claim alleges unsuitability and that misrepresentations had been made by the stockbroker regarding real estate securities and promissory notes.

FINRA Public Disclosure also confirms that Forrest has been fined $5,000.00 and suspended for ten months from associating with any FINRA member in any capacity based upon findings that he effected sales of Woodbridge promissory notes through private securities transactions which were not authorized by American Portfolios. Letter of Acceptance Waiver and Consent No. 2018059400801 (Apr. 11, 2019).

According to the AWC, fifteen investors were steered by Forrest towards purchasing promissory notes that were related to Woodbridge Group of Companies LLC. The AWC noted that the purported real estate investment fund was the subject of a Chapter 11 bankruptcy petition filed in December 2017. On December 27, 2018, Woodbridge and owner Robert H. Shapiro were ordered by Securities Exchange Commission (SEC) to pay a civil penalty and to disclose unlawful gains. Case No. 17-24624.

FINRA noted that thirteen investors were customers of American Portfolios. Forrest was obligated under the securities broker dealer’s rules to ask for and obtain authorization before engaging in private securities transactions. These supervisory requirements were also applicable to promissory notes transactions. The AWC stated that Forrest went against American Portfolios’ wishes, selling promissory notes to investors after being told that he was prohibited from initiating these types of securities transactions. Forrest’s conduct was violative of FINRA Rules 2010 and 3280.

Forrest was also fined $3,000.00 and ordered by the State of Michigan to cease and desist violating MCL 451.2301 and MCL 451.2402 as it pertained to his offer and sale of Woodbridge securities including Woodbridge Mortgage Investment Fund 3 LLC, Woodbridge Mortgage Investment Fund 3A LLC, and Woodbridge Mortgage Investment Fund 4 LLC to residents in the State of Michigan when he was an unregistered agent. Case No. 33313 (Nov. 5, 2018). The regulator also noted that these securities were neither registered nor exempt from registration.