Investors In HJ Sims Private Placements May Have Arbitration Claims

Investors in private placement securities sold by brokerage firm Herbert J Sims & Co., a/k/a HJ Sims may have potential arbitration claims, if their investment was recommended by a financial advisor who lacked a reasonable basis for the recommendation, or if the nature of the investment was misrepresented by the stockbroker or advisor.

HJ Sims has reportedly offered to investors a number of private placement investments that the firm itself structures and establishes.  These so called Regulation D private or “Reg D” private placement offerings sold by HJ Sims have reportedly totaled about $2.2B billion in principal value sold.  Reportedly HJ Sims sold 84 separate private placements.  Some of the private placements sold by HJ Sims are the following: 

• Fountains Acquisition Finance
• Fox Ridge Finance
• Orchard View, Acquisition
• DRSN Real Estate GP
• Elderwood Acquisition
• Heatherwood Acquisition
• Sims Merrill Gardens III
• Stuart Lodge Living/Stuart Lodge Properties
• Discovery Funding Sarasota Bay
• Athena Acquisition VI
• Epic Finance I
• Carmel Acquisition
• Treeo Funding I
• Fountains of Hope
• Tuscan Isle Property Company
• Tuscan Gardens of Venetia Bay Properties
• Gryphon BH Funding
• HJSI Athena Portfolio Finance
• Tuscan Isle ChampionsGate Prop. Co.
• Affinity Portfolio Funding
• Affinity Portfolio Funding II
• Affinity Portfolio Funding III
• Affinity Development Funding I
• BHCP Acquisition
• Vantage Point Funding I
• Sante Funding I
• Tuscan Gardens of Palm Coast Properties
• Vita Funding I
• LW Development Funding I
• Affinity Funding IV
• NHG Funding I
• Affinity Portfolio Funding V
• Affinity Portfolio Funding VI
• Monarch Funding I
• Sims Benchmark V
• TL Funding I
• Sims Merrill Gardens V
• Stonebridge Funding I
• NHG Funding II
• Riverview ALF Holdings
• Civitas Funding I
• Inspirit Venue Funding I
• Sims High Income Portfolio
• NHG Funding III
• Monarch Funding II
• Monarch Funding III
• Monarch Funding IV
• DRSN Real Estate GP
• TL Funding II
• NREA Southeast Portfolio Three
• Links Funding I
• Family Health Funding I
• Sims Benchmark VI
• NREA Retreat, DST
• Sims Merrill Gardens VI
• Griffin Capital (South Beach – Vegas) DST
• TL Funding III
• TL Funding IV
• Caraday Funding I
• Crown Point Funding I
• Magnolia Funding I
• Voralto Funding I
• Links Funding II
• ALG Funding IX
• Watermark FL Funding
• SAL Funding I
• Commercial Equipment Finance Income Fund
• Elevate Funding I
• Vinebrook Homes Trust
• Parliament Credit Opportunities Fund
• Comprehensive Care Funding I
• PPG Funding I
• PPG Funding II
• Hill Valley Funding I
• Links Funding III
• NexPoint Buffalo DST
• NexPoint Hughes DST
• HBS Acquisition Finance
• Mackenzie Preferred Funding
• Cleveland Thermal
• Sims Cathcart Funding
• Cypress Point Funding
• Riverchase Funding
• Gryphon Finance I
• Madison Funding I
• Tuscan Isle Holdings I
• Tuscan Isle Championsgate Holdings
• Hawkeye Village Finance I
• Meridian Portfolio Funding I
• Poet’s Walk Funding I
• Wakefield Portfolio Funding I
• HJSI Athena Portfolio Finance

Private placements are investments that are not publicly registered with the Securities and Exchange Commission that are offered via various exemptions from registration that permit the sales.  Sales of certain private placements including those offered under an exemption known as “Regulation D” are largely limited to sales to “accredited investors” who meet certain eligibility criteria established by the Securities and Exchange Commission (SEC).  For example, an investor would be accredited if they had a net worth over $1 million, excluding primary residence (individually or with spouse or partner) or income over $200,000 (individually) or $300,000 (with spouse or partner) in each of the prior two years, and reasonably expects the same for the current year.  Investors can also be deemed accredited based upon professional experience.

Private placements are generally speculative and illiquid, in comparison to publicly traded securities such as common stocks listed on exchanges or mutual funds.  However, private placements have been popular with certain independent broker-dealer firms because private placement investments generally carry commissions many times higher than publicly traded securities.  Many private placements may carry commissions and other upfront costs ranging from 7% to 12% in total fees, costs, due diligence fees, and selling commissions to the brokerage firm.

As members and associated persons of FINRA, brokerage firms and their financial advisors must ensure that adequate due diligence is performed on any investment that is recommended to investors- including private placements under Regulation D.  Further, firms and their brokers must ensure that investors are informed of the risks associated with an investment, and must conduct a suitability analysis to determine if an investment meets an investor’s stated investment objectives and risk profile. Either an unsuitable recommendation to purchase an investment or a misrepresentation concerning the nature and characteristics of the investment may give rise to a claim against a stockbroker or financial advisor.

Investors who wish to discuss a possible claim may contact a securities arbitration lawyer at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or via email at newcases@investorlawyers.net for a no-cost, confidential consultation.  Attorneys at the firm are admitted in New York, Wisconsin and various federal courts around the country, and handle cases nationwide (in cooperation with attorneys located in those states if required by applicable rules).  THIS ARTICLE IS INTENDED AS ATTORNEY ADVERTISING AND IS NOT AN OFFICIAL LEGAL ANNOUNCEMENT.