Alternative Investment Attorney

An alternative investment attorney represents investors who lost money in products outside ordinary stocks, bonds, and cash. These include non-traded REITs, private placements, annuities, structured notes, and oil and gas programs. When a broker recommended an unsuitable product or hid its risks, the claim is brought in FINRA arbitration.

Our alternative investment attorneys at Weltz Law work inside the FINRA dispute resolution forum on behalf of investors nationwide. FINRA stands for the Financial Industry Regulatory Authority, the organization that oversees brokerage firms and runs the arbitration system for most investor claims.

This page is part of our securities lawyer practice. It links to every alternative product our team covers. For outright scams and fraudulent schemes, see our alternative investment fraud lawyer page.

What Are Alternative Investments, and Why Do They Lead to So Many FINRA Claims?

Alternative investments are financial products outside traditional stocks, bonds, and cash. They include real estate programs, private funds, annuities, structured notes, and commodity-based deals. They lead to many FINRA claims because they are complex, costly, hard to sell, and often sold with high commissions.

Some alternative investment products are perfectly legitimate. Institutional investors use them every day.

The trouble starts when they are sold to the wrong person. A retiree who needs income and access to cash is a poor fit for a product locked up for seven years. A conservative investor is a poor fit for a note tied to a volatile stock.

Many of these products also have fewer public disclosures than listed securities. Investors depend heavily on what the broker tells them. When that information is incomplete or wrong, a claim may follow.

Which Real Estate, Private Placement, and Energy Products Does Our Alternative Investment Attorney Team Handle?

Our alternative investment attorneys handle claims involving non-traded REITs, private placements, tenant-in-common interests, 1031 exchange products, oil and gas programs, hedge funds, and private notes. Several specific sponsors and programs have their own pages as well.

Find the product closest to your investment:

• Non-traded REITs: Real estate investment trusts not listed on an exchange. See our REIT lawyer page.
• NorthStar Healthcare REIT: A healthcare-focused REIT that left many investors with illiquid shares. Read about NorthStar Healthcare REIT.
• United Development Funding: Real estate lending funds tied to residential development. See UDF investment losses.
• Private placements: Unregistered offerings with limited disclosure. Learn about private placement securities.
• GPB Capital: Private placement funds that suspended distributions. Read about GPB Capital Holdings.
• EcoVest: Conservation easement programs sold as investments. See EcoVest Capital.
• Tenant-in-common interests: Shared ownership in real estate, often used in tax-deferred exchanges. Learn about tenant-in-common investments.
• 1031 exchange products: Replacement properties sold to defer capital gains taxes. Read about 1031 exchange investments.
• Oil and gas private placements: Drilling and exploration programs. See oil and gas private placements.
• Oil and gas royalty trusts: Trusts that pay income from energy production. Learn about oil and gas royalty trusts.
• Master limited partnerships: Energy partnerships with complex tax and income features. Read about oil and gas MLPs.
• Hedge funds: Private funds with complex strategies and limited transparency. See hedge fund fraud.
• Promissory notes: Private notes promising fixed returns. Learn about promissory note fraud.
• High-yield investment programs: Programs promising unusually high returns. Read about high-yield investment program scams.
• Selling away: Products sold outside the brokerage firm without approval. See selling away claims.

Not sure which category your investment falls into? That is common. The offering documents usually make it clear.

What Risks Make Alternative Investment Products Different From Stocks and Bonds?

Alternative investment products usually carry less liquidity, less transparency, higher fees, and more complexity than stocks and bonds. Many are not traded on any exchange. Their values can be estimates, and their risks are often buried in long offering documents.

With a listed stock, you can check the price any day and sell it in seconds. With a non-traded REIT or private fund, there may be no buyer at all.

Fees are another difference. Upfront commissions and offering costs on many alternative products can be several times higher than on ordinary investments. That gives brokers a strong reason to recommend them.

Complexity is the third. Some structured notes depend on formulas that even experienced investors struggle to follow. If the broker cannot explain how the product makes or loses money, the investor almost certainly cannot either.

Which Annuities and Structured Products Lead to Alternative Investment Claims?

Variable annuities, equity-indexed annuities, structured notes, reverse convertible notes, and options-based strategies are common sources of claims. These products mix investment features with fees, surrender charges, or hidden downside risk that many investors do not fully understand.

Products in this group include:

• Variable annuities: Insurance contracts invested in the market, with high fees and surrender charges. See variable annuities.
• Equity-indexed annuities: Annuities tied to a market index with caps and complex crediting rules. Read about equity-indexed annuities.
• Annuity fraud: Misleading sales and unnecessary annuity switches. Learn about annuity fraud.
• Structured products: Notes whose return depends on another asset or index. See structured products.
• Reverse convertible notes: High-yield notes that can convert into falling stock. Read about reverse convertible notes.
• Equity-linked notes: Notes tied to the performance of a stock or basket. Learn about equity-linked notes.
• Yield Enhancement Strategy: An options strategy marketed as an income booster. See Yield Enhancement Strategy losses.
• Securities-backed lines of credit: Loans secured by an investment account. Read about securities-backed lines of credit.

The common thread is hidden risk. These products can look safe in normal markets and then lose value fast when conditions change.

Which Fund Products Have Caused Losses for Investors Who Thought They Were Safe?

Some funds marketed as safe or cash-like have caused serious losses. These include short-term bond funds, quasi money market funds, closed-end funds, unit investment trusts, and certain municipal bond strategies. The problem is usually a gap between the label and the real risk.

An investor told a fund is "almost like cash" may not expect it to drop. But some short-term bond funds and quasi money market funds held riskier assets than their names suggested.

Closed-end funds can trade well below their underlying value and often use borrowed money. Unit investment trusts carry sales charges that add up when brokers roll them over early.

Bond strategies that use borrowed money can also go wrong. Learn about municipal bond arbitrage and the UBS Puerto Rico bond funds, which concentrated investors in a single troubled market.

What Duties Do Brokers Owe When Recommending Alternative Investments?

Brokers must follow the suitability and best interest standards. That means understanding the product, weighing its costs and risks, and recommending it only when it fits the customer. Brokerage firms must also perform reasonable due diligence before offering an alternative product at all.

Investment advisers owe an even broader fiduciary duty, which means putting the client's interests first in everything.

For alternative products, the duty to understand matters a great deal. A broker cannot fairly recommend something they do not understand. Firms are expected to review the sponsor, the structure, and the risks, and to train brokers before letting them sell it.

Concentration matters too. Even a suitable product can become unsuitable when too much of an account goes into it. Learn more about investment product due diligence and over-concentration.

Who Is Most at Risk of Being Sold an Unsuitable Alternative Investment?

Retirees, conservative investors, people who need steady income, and those with little experience in complex products are most at risk. These investors often rely heavily on the broker's explanation and may not have the time or flexibility to wait out an illiquid product.

Picture a widow with a modest IRA who tells her broker she needs monthly income. She ends up with a non-traded REIT, a variable annuity, and a structured note. Each one pays a high commission. None can be sold easily if she needs money for a medical bill.

That kind of portfolio may raise unsuitable investment, over-concentration, and misrepresentation claims all at once. When the investor is older, it may also raise concerns about financial elder abuse.

What Are the Warning Signs That an Alternative Investment Was Mis-Sold?

Warning signs include a product you cannot sell, income that suddenly drops, and values that stay flat for years and then fall. So does a broker who described the investment as safe or guaranteed. Large positions in a single private product are another red flag.

Look for these signs in your account:

• No way out: You learn the investment cannot be sold or redeemed when you need money.
• Distributions cut or suspended: Income that was promised as steady suddenly stops.
• Stale values: A statement value that never moves, then drops sharply.
• "Safe" or "guaranteed" pitches: Words that do not match the offering documents.
• Heavy concentration: A large share of savings in one product or sponsor.
• Surprise fees: Surrender charges or exit costs you were never told about.

Any one of these is worth looking into. Several together often point to a problem with how the product was sold.

How Does the FINRA Six-Year Window Apply to Alternative Investment Losses?

The FINRA eligibility rule generally bars claims filed more than six years after the event that caused the dispute. Alternative investments often hide problems for years, so the window can be close by the time investors notice. State deadlines may also apply.

A non-traded REIT might report a steady value for five years before cutting its price. A private placement might pay distributions until the day it stops.

By the time the loss is obvious, the original sale may be near the six-year mark. Our alternative investment attorneys check the purchase dates at the first review.

What Records Should You Gather for an Alternative Investment Attorney?

Gather the offering documents, account statements, subscription agreements, and every communication with the broker. These records show what you bought, what it cost, and what you were told about the risks.

Start with these:

• Offering documents: Prospectuses, private placement memorandums, and annuity contracts.
• Subscription agreements: Including any investor questionnaires you signed.
• Account statements: From both the brokerage firm and the product sponsor.
• Distribution and valuation notices: Letters about price changes, suspensions, or redemption limits.
• Marketing materials: Brochures and illustrations the broker provided.
• Communications: Emails, texts, and notes from calls or meetings with the broker.

If records are missing, the firm keeps its own copies, and many can be requested during discovery.

How Do Our Alternative Investment Attorneys Handle a FINRA Claim?

Our alternative investment attorneys start by understanding the product, then compare it with the investor's real needs and what the broker said. Each claim moves through the stages of FINRA arbitration, with clear explanations for the client at every step.

The first step is the product itself. Our team reviews the structure, fees, liquidity limits, and risk disclosures.

Next, our alternative investment attorneys compare that picture with the investor's age, goals, and finances. Then our FINRA arbitration attorneys draft and file the Statement of Claim, the written filing that starts the case.

Discovery follows. Our team requests the firm's due diligence files, product approval records, and the broker's commission data.

If the case reaches a final hearing, our alternative investment attorneys present the evidence, witnesses, and exhibits to the panel. No one can predict how a panel will rule. The goal is a clear record of what was sold and why it did not fit. Our page on FINRA arbitration explains the full process.

Talk With an Alternative Investment Attorney at Weltz Law

Did a broker sell you an alternative investment that turned out riskier, costlier, or harder to sell than you were told? It may be worth a closer look. A conversation with an alternative investment attorney can help you understand what options may exist.

Our alternative investment attorneys represent investors, retirees, trusts, and small businesses nationwide in FINRA arbitration. Bring your offering documents, statements, and a short timeline if you have them. Contact Weltz Law today to talk through what happened.