QA3 Financial Hammered with $1.6 Million Award in TIC Case

A Financial Industry Regulatory Authority (FINRA) arbitration panel issued an award for $1.6 million to two elderly investors who were in poor health, for their investments in tenants-in-common exchanges (TIC). The claim revolved around the couples’ investment in DBSI Mansell Plaza LLC and DBSI Beacon Point LLC, two limited partnerships packaged by DBSI, which filed for bankruptcy in November 2008. The panel found that Claimants, Arthur and Mary Ann Cargill, had very little investment experience and the broker, James Files, had little to no training or supervision regarding the recommendation or sale of such real estate deals, according to an article in Investment News.

In a lengthy explained decision, the panel ordered the broker, James R. Files to pay the Claimants $87,432 in compensatory damages; it ordered QA3 Financial to pay $212,568 in compensatory damages and ordered the transactions rescinded and QA3 to pay Claimants $1,378,292. All filing fees and forum fees for the arbitration were assessed to QA3. The panel will retain jurisdiction over the matter for 180 days. (FINRA# 09-05542; Arthur R. Cargill and Mary Ann Cargill v. QA3 Financial Corporation)

The panel elaborated that the investments in the DBSI 1031 Tenants-in-Common contracts were unsuitable for the Claimants considering the considerable risks associated and the possible loss of principal. Furthermore, the panel stated that QA3 did not adequately train and supervise its broker, Mr. Files, resulting in the failure to thoroughly and adequately explain the extent of risk to which the Claimants were exposed in these investments.

If you have suffered losses involving limited partnerships and TIC, please contact our securities law firm for a confidential, no obligation consultation at 1-800-259-9010.

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