Did You Lose Money with Dempsey Lord Smith, LLC?
Kurta Law is investigating investment recommendations by Dempsey Lord Smith LLC (CRD #: 141238) representatives. Dempsey Lord Smith offers high-risk products. It also has disclosed that it works with brokers who have allegations of misconduct on their records. This is according to its Customer Relationship Summary (Form CRS), the form that every brokerage firm is required to provide to its investors. This form also summarizes the fees and broker conflicts of interest.
Keep reading if you have any concerns about your investments with Dempsey Lord Smith.
Potentially Risky Investments Offered by Dempsey Lord Smith
Dempsey Lord Smith offers the following products, listed on its Form CRS:
Mutual Funds
Mutual funds offer an ongoing commission for the brokerage firm. Investors should also be aware that if they buy additional shares of a mutual fund class that they already own, they may be entitled to a breakpoint discount.
Exchange-Traded Funds
Investors should beware of leveraged or inverse Exchange-Traded Funds (also known as non-traditional Exchange-Traded Funds), as these are particularly high-risk.
Options
Options are speculative investments and are more likely to lose money than to generate a return.
Structured Notes
These are complex products that often come with too much risk to suit investors’ needs.
Variable and Fixed Indexed Annuities
Variable products can decline in value based on their underlying investments.
Private Placements
Private placements are not registered with the SEC and are therefore higher risk. Because they provide less public information, investors typically rely on their brokers to perform their due diligence on private placements.
Alternative Investments
Alternative investments are high-risk investments, including L bonds, 1031 Exchanges, options, non-traded REITs, oil and gas drilling zones, and conservation easement offerings. The firm discloses that these risky alternative investments may have minimum purchase requirements.
Dempsey Lord Smith Fees
Dempsey Lord Smith is registered as both a FINRA-regulated brokerage firm and an SEC-regulated advisory firm. The fees you pay depend on what type of account you have with the firm.
Always ask your financial professional to explain why they recommend a brokerage firm or an advisory firm. They should also thoroughly explain the associated fees with each type of account.
Brokerage Firm Fees
The firm discloses the following brokerage firm fees in their Form CRS:
Transaction-Based Commission: Every time you buy or sell a security, your broker earns a commission.
Ongoing Fees: Certain products, like mutual funds, charge ongoing fees, such as 12B-1 service fees.
Advisory Firm Fees
Advisory accounts typically charge a percentage of the assets under management.
Dempsey Lord Smith in the News
The brokerage firm’s involvement in alternative investments has landed it in the news. Dempsey Lord Smith was involved in the sale of syndicated conservation easements that a Senate Finance Committee report labeled abusive tax shelters. According to The Washington Post, Dempsey Lord Smith made $250,000 in broker placement fees.
Conflicts of Interest
The Form CRS states, “The way we make money creates some conflicts with your interests. You should understand and ask us about these conflicts because they can affect the recommendations and investment advice we provide to you.”
Certain products share revenue with Dempsey Lord Smith, creating an incentive for brokers to recommend these investments over others.
These products include the following:
These products often cover the cost of a meal and conference space so that Dempsey Lord Smith brokers can present the product to potential investors. These perks are considered non-cash incentives, adding to the incentives that brokers have to recommend these products over others.
The Form CRS also states, “We are not acting in a fiduciary capacity.” Stockbrokers are not held to a fiduciary standard, meaning they do not have a legal obligation to work in your best interest. Registered Investment Advisors, however, are fiduciaries. Investors should know what type of financial professional they are working with and whether they have a fiduciary duty.
Dempsey Lord Smith Brokers with Disciplinary Records and Misconduct Allegations
Kurta Law is aware of the following brokers who have registered with Dempsey Lord Smith and have allegations of misconduct on their records. These allegations include recommendations of risky alternative investments, including GWG L Bonds. Many of the disputes mentioned in their records sought six-figure settlements.
This is not necessarily a complete list of Dempsy Lord Smith brokers who have faced allegations of misconduct.