Attorney: "People's Financial Lives Ruined" by Unsuitable Investments

Rochester, NYWhen clients turn to a financial advisor like William Tatro, or a financial firm such as Eagle Steward or First Allied Securities, they expect their money will be put in investments suitable to their risk tolerance and financial needs. An unsuitable investment is one that goes against the client's risk tolerance and financial needs. For example, a retired person can tolerate a lower degree of risk and may require more access to his money than a younger investor, meaning the retired person's account should have a low degree of risk and easy accessibility.

When they learn that a substantial portion of their account has been lost in unsuitable investments, they turn to an attorney to help recover their money. Robert Pearl, founder of the Pearl Law Firm, says Bill Tatro put his clients' money in unsuitable investments, causing massive losses.

"Our clients have complained about Tatro’s selection of investments for them," Pearl says. "Clients allege they were continually assured that the investments were appropriate when in fact they were not. The investments are typically high commission and illiquid, with a higher degree of risk than our clients would have accepted had they known the truth. These investments were unsuitable for practically any non-institutional investor. Under the rules of FINRA [Financial Industry Regulatory Authority] a broker can only make recommendations that are suitable for the investor."

According to Pearl, “My clients are particularly distressed that there were so many unsuitable investments chosen by Tatro, including such Real Estate Investment Trusts (REITs) as Cole, Icon, Inland and Wells and variable annuities such as Jackson National. Tatro also sold highly volatile leveraged inverse Exchange Traded Funds (ETF) such as Rydex and Proshares.”

"Tatro treated these leveraged ETF's as long-term investments, and clients lost their shirts on these," Pearl says. "When Tatro's clients were transferred to Morgan Stanley, Morgan Stanley would not allow the investments to be transferred over because they were so highly unsuitable. The customer's paper losses became realized losses when they were sold out because Morgan Stanley wouldn't allow them to be transferred."

Arbitrations have been filed against Tatro, alleging his clients suffered massive losses when their money was put into unsuitable investments.

In one arbitration a former Tatro client was awarded damages in the amount of $530,449.00. The client, Mid-Lakes Management Corp., filed the claim against Eagle Steward, an investment firm owned by Tatro. In making his award for the claimant, the arbitrator found that Tatro's explanation of the leveraged inverse funds "lacks credibility." The arbitrator further stated that there was no evidence Tatro properly investigated leveraged inverse funds because had he done so, he would have known that "holding leveraged inverse funds for a lengthy period of time dramatically increased risk for the claimant."

"The sad thing is that many peoples' financial lives have been ruined," Pearl says. "Some victims have been forced to take part-time jobs while creditors attempt to garnish their wages because they can't pay their bills. The situation is awful. The large number of victims is evidence of the fact that these investments were sold with a 'one size fits all' approach, another violation of industry standards and good practices."

According to Tatro's official record, over $3 million has been paid to his customers in settlements.