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Bristol, Connecticut Financial Advisor Jeffrey Davis Sued for Overconcentration of REITs

Jeffrey Davis (CRD#: 2501354) is a broker affiliated with Kovacs Securities Inc. He does business as Davis Financial, LLC of Bristol, Connecticut. On June 10, 2019, he became involved in a pending customer dispute in which a client is alleging that he recommended unsuitable fixed index annuity and mutual funds, and overconaccountant-1238598_1280-300x200centrated REITs in her portfolio, according to his BrokerCheck record accessed on August 8, 2019.

This is not the first time that a client has accused Jeffrey Davis of overconcentrating Real Estate Investment Trusts (REITs).

On April 5, 2017, Jeffrey Davis entered into an AWC (Letter of Acceptance, Waiver, and Consent) with FINRA in which he consented to the findings that he “the entry of findings that he recommended and effected unsuitable transactions in the accounts of customers by over-concentrating their assets in illiquid non-traded REITs. The findings stated that the investments totaled $566,000, and represented between approximately 30% and 52% of the customers’ liquid net worth. These excessive concentrations in illiquid investments were unsuitable in light of the customers’ financial situations, risk tolerances and investment objectives.” He agreed to a one-month suspension and a $5,000 fine. The suspension lasted from May 1, 2017 to May 31, 2017.

On March 1, 2012, Jeffrey Davis and his firm, Harvest Capital, settled a claim for $24,778.95 after a client claimed he did not understand the Real Estate Investment Trust due to his limited command of English.

Real Estate Investment Trusts (REITs) allow individuals to buy share in commercial real estate portfolios. These portfolios have holdings of various properties. According to Investopedia, “Properties included in a REIT portfolio may include apartment complexes, data centers, health care facilities, hotels, infrastructure—in the form of fiber cables, cell towers, and energy pipelines—office buildings, retail centers, self-storage, timberland, and warehouses.”

It’s important for investors to know the difference between publicly-traded REITs and public non-traded REITs. Publicly-traded REITs are listed on a national exchange (like the NYSE). In contrast, public non-traded REITs are not publicly traded, though they are registered with the Securities and Exchange Commission (SEC) . REITs are appealing to investors because they are highly liquid, have the potential to pay out steady dividends, and can help diversify one’s portfolio. REITs may give investors pause because of high transaction fees, low growth, and of course market risk. As with any securities product or investment opportunity, investors should take care to weigh their needs and expectations before making a decision.

On July 14, 2003, National Planning Corporation settled a claim involving Jeffrey Davis after a client alleged, “misrepresentation of investment product [and] breach of fiduciary duty. Client alleges that sytematic [sic] monthly withdrawals from the account purchased in 2000 were represented to be interest and dividends, not principal and therefore withdrawals and market forces decreased her account value below the original principal invested, and that while knowing that in order to receive the full principal protection provision of the fund the principal would have had to remain invested for five years, it was not realized that those withdrawals reduced the guarantee. Upon realizing that, the account was redeemed in 2002. Therefore client alleges that client is owed interest on original investment plus lost principal and attorneys fees.” The client originally requested $48,000 in damages; the claim was settled for $35,000.

Jeffrey Davis’s firm settled a claim in which a client of Invest Financial Corporation alleged that he “sold a variable annuity to him without disclosing the risk involved and the timeframe in which the money could be accessed.” The client, who filed the claim on August 27, 2001, requested $41,258.38 in damages, and the case was settled for that amount.

On January 10, 2001, National Planning Corporation terminated Jeffrey Davis after he signed a client’s name to a form.

In addition to Kovacs Securities, Inc., Jeffrey Davis has been affiliated with the following firms over his 24-year career in the securities industry:

  • Harvest Capital LLC (CRD#: 35723) of Wethersfield, Connecticut
  • National Planning Corporation (CRD#: 29604) of Los Angeles, California – terminated by the SEC on September 8, 2018
  • Invest Financial Corporation (CRD#: 12984) of Appleton, Wisconsin
  • MetLife Securities Inc. (CRD#: 14251) of Springfield, Massachusetts
  • Metropolitan Life Insurance Company (CRD#: 4095) of New York, New York

If you’ve done business with Jeffrey Davis or have questions about your investments, don’t hesitate to contact the experienced securities attorneys of Fitapelli Kurta. Call (877) 238-4175 or email for your free consultation.

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