Charles Kulch Has A History Of FINRA Regulatory Issues
Over the past 22 years, Kulch has several significant regulatory events disclosed on his FINRA CRD Report.
- As early as 1999, Kulch was suspended and fined by the New Hampshire securities regulator for “operat[ing] an unqualified branch office based on the fact that he was not qualified as a principal of such office.”
- In 2008, Kulch was fined by the New York Insurance Department for “provid[ing] materially incorrect and untrue information . . . on his license application for his agent’s license.”
- In 2011, while working for NEXT Financial Group, Kulch was fined $140,000, for which Next Financial was jointly and severally liable, for “fail[ing] to reasonably supervise the dissemination of seminar invitations containing inaccurate information.”
In addition, Kulch is currently facing a pending regulatory action brought by the Massachusetts Securities Division. The action alleges that “Kulch over-concentrated customers in illiquid, risky, and high commission products including non-traded real estate investment trusts and variable annuities.” The action seeks a permanent bar from operating as a broker, a cease and desist order, censure, civil and administrative penalties and fines, disgorgement, and restitution. The Massachusetts action alleges that Kulch was improperly recommending the following investments:
- Northstar Real Estate Income Trust
- Phillips Edison/ARC Shopping Center REIT
- Cole Credit Property Trust
- Strategic Storage Trust
- Steadfast Income REIT
- Inland Real Estate Income Trust
- Behringer Harvard Multifamily REIT
- WP Carey CPA 17 Global REIT
Despite this regulatory history, NEXT Financial Group continued to employ Kulch for a decade while customer complaints about his investment recommendations began to pile up.
Many Securities Arbitration Claims Relate To The Recommendation Of Non-Traded REITs
Kulch has four pending customer disputes disclosed on his FINRA record, all of which allege virtually identical misconduct: “Alleged unsuitable recommendation of investments in registered, non-traded real estate investment trusts (REITs)” over the past several years.
NEXT Financial Group has settled claims against Kulch with similar allegations. In September 2020, NEXT paid $14,999 to settled claims alleging sale of unsuitable nontraded REITs.
Over the previous 20 years, Kulch and his employers settled four other customer complaints, including:
- In April 2015, NEXT Financial Group paid a settlement of $525,000 to resolve claims that “NEXT Financial Group, Inc., misrepresented the special risks associated with investments in certain tenant-in-common (TIC) investments, and that the investments were unsuitable as the fees and risks far outweighed the potential tax deferment.”
- In May 2016, Kulch’s previous employer paid a settlement of $120,000 to settle a customer complaint alleging poor performance related to a real estate security.
- In May 2016, Kulch’s previous employer paid $75,000 and NEXT Financial paid $150,000 to settle a customer’s claims related to oil & gas investments and real estate securities, among other things.
- In 2006, Kulch and his previous employer paid a settlement of $100,000 to settle allegations of market losses due to unsuitable investment recommendations. Kulch contributed $50,000 to the settlement.
Real Estate Investment Trusts (REITs) Are Main Product at Issue In Kulch’s Recent Customer Complaints
REITs are modeled after mutual funds in the sense that a company owns or finances income-producing real estate and typically offer investors a revenue stream, diversification, and long-term capital appreciation. They are often advertised as sound retirement vehicles because they provide high dividend yields.
However, these products are notoriously flawed. In recent years, the Securities and Exchange Commission (SEC) and FINRA have issued warnings and guidance on REITs, pointing to unreasonably and unfairly high commissions and fees, lack of transparency, and lack of liquidity. Investors in REITs can end up losing significant value and being stuck in the investment because REITs are not publicly traded on an exchange.
Did You Lose Money Investing With Charles Kulch At NEXT Financial Group, Inc.?
Silver Law Group is experienced in representing investors in claims related to REITs and many other alternative investments. If you or someone you know experienced losses with Charles Kulch and/or NEXT Financial Group, Inc., contact Silver Law Group for a confidential consultation toll free at (800)-975-4345 or e-mail ssilver@silverlaw.com.