Michigan-based Firm and Licensed Broker Pocket $11.4 Million in Commissions

Alleged misrepresentation of REITs and BDCs by Purshe Kaplan Sterling Investments and Gopi Vungarala to their client, a Native American Tribe, lead to exorbitant commissions to the detriment of the tribe

Purshe Kaplan Sterling Investments and their licensed broker Gopi Vungarala have been named respondents in an FINRA compliant that alleges numerous violations of the securities commission.

A registered and licensed broker for eleven years, Gopi Vungarala is under investigation for repeatedly lying about investments and commissions to his client, a Native American Tribe, for more than three years. According to his BrokerCheck report, Vungarala, as the tribes registered representative and treasury investment manager, convinced his client to invest hundreds of millions of dollars in non-traded REITs and business development companies without revealing that he and his firm received commissions on the sales or that these sales were eligible for volume discounts. Instead, it is alleged that Vungarala kept those discounts in the form of commissions for himself and the firm.

As the tribe’s trusted financial advisor, Vungarala knew he was prohibited by the Tribe to engage in business activities that were a conflict of interest for them and that the tribal leaders relied upon his recommendations as their treasury investment manager. However, Vungarala recommended they invest $190 million in non-traded REITs and BDCs over the course of three years. These investments generated $11.4 million in commissions for his firm. $9.6 million of that amount went directly to Vungarala himself.

FINRA is also sanctioning the firm, Purshe Kaplan Sterling Investments, for failing to conduct adequate due diligence of its registered representatives’ outside business activities. The firm approved Vungarala’s activities and did not provide adequate supervision or even have a supervisory system in place to review the performance reports by their registered representatives.

Since the allegations, Vungarala has voluntarily resigned his position with the firm. The firm has been fined $200,000 and is required to provide FINRA with a written plan of how they will conduct a review of the adequacy of the relevant policies and procedures related to the conduct of their registered representatives.

Both Vungarala and his firm, Purshe Kaplan Sterling Investments, are allegedly at fault in this case and responsible for this scheme that cost the client millions of dollars. If you have worked with Purshe Kaplan Sterling Investments in any of their national locations or had dealings with Vungarala and lost money as a result, you may be able to recover some or all of your losses.

We represent the interest of investors who are victims of investment fraud. If you have questions about your legal rights or need help, please contact us today for a free consultation with one of our experienced securities arbitration attorneys.