HomeWealth ManagementFormer Rep Loses FINRA Attraction Over Non-Traded REIT Suggestions

Former Rep Loses FINRA Attraction Over Non-Traded REIT Suggestions


A former Western Global Securities dealer misplaced an enchantment of a FINRA resolution that he beneficial flawed non-traded actual property funding agree with purchases.

Megurditch Patatian, the California-based former registrant, at the start informed FINRA investigators he used to be unfamiliar with the illiquid, high-risk merchandise sooner than recommending them, although he later argued his phrases have been “twisted and manipulated” via regulators.

In keeping with the enchantment, Patatian joined the business in 1999, and labored at WM Monetary and Los Angeles County’s Water and Energy Neighborhood Credit score Union by means of CUSO Monetary Services and products, operating most commonly with retirees from the Los Angeles County Division of Water and Energy. He resigned from CUSO, with the company pronouncing he did not practice corporate insurance policies on documenting transactions, consistent with his BrokerCheck profile

Patatian joined Western global Securities in 2013 with 100 purchasers, maximum of whom transferred from CUSO and have been DWP retirees. Maximum of his industry concerned recommending and promoting non-traded REITs to those purchasers, consistent with FINRA. 

He later testified he used to be green with the product sooner than becoming a member of Western, however over 4 years, he beneficial 81 purchases totaling greater than $7.8 million in non-traded REITs to 59 shoppers, a minimum of one-third of whom have been 65 or older. Non-traded REITs are thought to be a high-risk, continuously illiquid product that don’t seem to be appropriate for plenty of buyers.

4 unnamed purchasers testified in opposition to Patatian, with every other shopper who died sooner than the listening to represented via their son. One sufferer, named “JO” within the criticism, labored as a water remedy manager on the DWP for just about 36 years and opened a CUSO account with Patatian in 2006, therefore following him to Western. 

On the time she opened a Western account, JO used to be in the course of a divorce, being handled for most cancers, and didn’t know the place she and her 4 kids have been going to reside, consistent with FINRA, and thus asked her cash be “secure and readily available” when wanted. 

JO had an annual source of revenue of $100,000 and a $2.5 million internet price, and in 2014, surrendered a variable annuity she held and invested the proceeds right into a non-traded REIT (paying about $34,000 in federal and state taxes, which she claims Patatian by no means mentioned). She claimed the dealer additionally by no means mentioned the dangers of the funding, and handiest after time and again urgent him to promote it did she get her a reimbursement (at a nearly $26,000 loss).

Every other shopper referred to as JR have been a shopper with Patatian since 2004 sooner than retiring from her activity as a DWP safety guard. She first started showing dementia signs in 2012, along with her son acquiring energy of legal professional that yr. Via 2015, JR lived in a retirement group, and ultimately moved to a residential care facility. 

When the son “vented” to Patatian concerning the monetary rigidity of the placement, Patatian allegedly “driven” a non-traded REIT funding. JR and her son signed paperwork agreeing to spend money on the REIT, however the son later discovered that his mom’s monetary information used to be “considerably overstated,” along with her annual source of revenue at $60,000 and her internet price about $250,000, some distance not up to the $2.5 million the dealer recorded. JR used to be nonetheless invested within the dangerous REIT when she died in 2018.

FINRA first started taking a look into Patatian in 2013, in response to his departure from CUSO, although it in the long run made up our minds in opposition to submitting disciplinary fees. However all through that investigation, regulators discovered about a few of his alleged behavior at his new company, and opened every other investigation in 2018; Patatian sat for on-the-record testimony in spring 2020.

All over his testimony, Patatian mentioned he had no real interest in or revel in with REITs sooner than becoming a member of Western. The company introduced “just about no coaching” concerning the product sooner than he started recommending it, and Patatian time and again reiterated he didn’t perceive the funding, and if he had, he wouldn’t have beneficial them to shoppers, calling them a “nightmare” and “crisis” for purchasers.

“‘Like, I didn’t know,’” Patatian mentioned all through his 2020 testimony, consistent with FINRA. “I used to be too silly to in reality perceive what it used to be in reality all about, and I assume I used to be in charge of taking a look away.”

In February 2021, FINRA filed a five-part criticism in opposition to Patatian for making flawed suggestions of the REITs and variable annuities, in addition to impersonating a buyer on a decision with an insurance coverage corporate. In June 2022, after a seven-day listening to, a FINRA panel dominated in opposition to the previous dealer and barred him from the business, which he therefore appealed.

All over the listening to and appeals, Patatian mentioned his testimony from 2020 used to be “lovely outlandish” and manipulated via regulators, pronouncing he in reality did analysis REITs sooner than recommending them, and that he “understood REITs higher than every other dealer in his place of job.” Patatian additionally argued he believed he used to be showing as a “cooperating witness” in opposition to Western all through his 2020 testimony, however FINRA discovered not anything indicating regulators made this type of recommendation.

“In any tournament, even though Patatian in fact believed he used to be a cooperating witness, this helps that his testimony on the 2020 OTR used to be fair,” the enchantment resolution learn. 

However FINRA panelists all through the preliminary listening to and enchantment weren’t purchasing it, and panelists all through the enchantment affirmed the unique resolution. The listening to panel at the start ordered Patatian pay just about $263,000 in restitution to shoppers along with the $458,418 in disgorgement, however the restitution used to be reversed on enchantment. 

Western Global Securities already agreed to pay $520,000 in restitution to settle FINRA fees it did not oversee Patatian’s fallacious advice of non-traded REITs (he is not named within the Western agreement, although the outline of the dealer fits his behavior precisely). 

Patatian left Western in March 2020 and has no longer been affiliated with any company since then, consistent with FINRA; he may no longer be reached for remark. Western didn’t reply to a request for remark previous to e-newsletter.

Western, a department of Atria Wealth Answers, used to be additionally on the middle of the Securities and Trade Fee’s first fees beneath Law Absolute best Passion in 2022. The fee charged the brokerage company and 5 of its reps with recommending and promoting “L” bonds, a high-risk debt safety, to retail buyers and retirees in opposition to their highest passion.

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