• February 3, 2024
• iCap Enterprises
• iCap Northwest Opportunity Fund, LLC

Thomas Burgess Hamlin (CRD#: 2208505) is a registered broker and investment advisor with Somerset Securities, Inc., in Portland, OR.

 

Broker’s Background

He entered the securities industry in 1992 and previously worked with Advantage Capital Corporation; Spelman & Co., Inc.; Prudential Securities Incorporated; and Raymond James Financial Services.

 

Current and Past Allegations Leading to Investment Loss

According to publicly available records released by the Financial Industry Regulatory Authority (FINRA), in December 2023, Thomas Hamlin became the subject of a customer dispute alleging, “unsuitable recommendation to purchase iCap Equities private placement. iCap Equities filed for bankruptcy on 9/12/2023.” The damage amount requested is $168,000 and the customer dispute is still pending.

 

In addition, Thomas Hamlin has five other disclosures, four involving iCap Securities:

• December 2023—“ Alleged unsuitable recommendation to purchase iCap Equities private placement. iCap Equities filed for bankruptcy on 9/12/2023.” The damage amount requested is $504,476 and the customer dispute is still pending.
• November 2023—“ Alleged unsuitable recommendation to purchase iCap Equity private placement. iCap Equity filed for bankruptcy on 9/12/2023.” The damage amount requested is $500,000 and the customer dispute is still pending.
• October 2023—“ Alleged unsuitable recommendation to purchase iCap Equity private placement. iCap Equity filed for bankruptcy on 9/12/2023.” The damage amount requested is $285,000 and the customer dispute is still pending.
• September 2023—“ Alleged unsuitable recommendation to purchase iCap Equity private placement. iCap Equity filed for bankruptcy on 9/12/2023.” The damage amount requested is $355,000 and the customer dispute is still pending.
• November 2012—Discharged by Raymond James Financial Services for, “FAILURE TO DISCLOSE OUTSIDE BUSINESS ACTIVITY.”

 

For a copy of Thomas Hamlin’s FINRA BrokerCheck, click here.

 

iCap Enterprises, Inc. Files for Chapter 11 Bankruptcy, Leaving Investors Facing Large Losses

The Wolper Law Firm previously announced that it was investigating claims against brokerage firms and investment advisors that recommended that clients invest in the family of private placement offerings issued by iCap Enterprises, Inc.  Most of the iCap Enterprises securities are in the real estate sector.

On September 29, 2023, iCap Enterprises and all of the below referenced funds issued by iCap, filed for Chapter 11 bankruptcy protection in the District Court in and for the Eastern District of Washington.

The History of the iCap Enterprises Funds?

Private placements is a broad term that describes securities that are not offered for sale through a public exchange. These can include promissory notes, private equity offerings, real estate investment trusts, small, start-up businesses, etc. Private Placements are issued under Regulation D under the Securities Act of 1933. Regulation D provides exemptions from the more rigorous Securities and Exchange Commission (SEC) registration requirements and allows companies to offer and sell securities without extensive disclosures. The absence of standard disclosure requirements enhances the risk of misconduct associated with a securities offering.

The Securities Exchange Commission, federal courts, and FINRA have all found that brokerage firms have a duty to conduct a reasonable investigation concerning the private placements issuer’s representations concerning the security. A brokerage’s firm’s due diligence obligation also stems from suitability obligations requiring the broker to have reasonable grounds to believe that a recommendation to purchase, sell or exchange a security is suitable for the customer. In order to meet the due diligence obligation, the brokerage firm and/or financial advisor must make reasonable efforts to gather and analyze information about the private placement, the issuer and its management, the business prospects of the issuer, the assets held by or to be acquired by the issuer, the claims being made by the issuer in the offering materials, and the intended use of proceeds of the offering. The failure to determine this and other material information would necessarily preclude a financial advisor from disclosing to a customer the material aspects of a transaction.

Private placements have increased in popularity over the years as investment professionals attempt to capitalize on volatility experienced among publicly trades securities.  Private placements are often marketed and sold as safe and stable income producing vehicles that are not subject to the same market forces as publicly traded securities.  While there is some level of truth to that statement, the reality is that private placements are speculative and do not have the same reporting requirements as publicly traded securities.  This means that private placements can often mask financial difficulties until it is too late.  Moreover, because private placements are illiquid, investors are often unable to sell their interests to third-parties before experiencing an investment loss.  Unfortunately, many advisors overlook these risks because the commission structure for private placements is higher than traditional securities, often ranging between 7%-10%.

 

The iCap securities are in distress.  In March 2023, the CEO of iCap, informed investors that “it appears that interest rates are on track to continue rising which means things will likely worsen in the near term.”  The CEO further advised that “the current situation has impacted the real estate portfolio that iCap manages and therefore our ability to return capital to investors under the time frame originally proscribed in our disclosure documents.  We are writing to inform you that at this time we are not able to continue making monthly interest payments.”  Several months later, on September 29, 2023, iCap filed for bankruptcy.  According to the bankruptcy filing, iCap Enterprises, through its various funds, has less than $100 million in assets and up to $500 million in liabilities.  It is also reported that iCap has up to 5,000 individual creditors.

 

What Can I Do to Recovery My Losses in the iCap Enterprises?

 

Investors who invested in the iCap family of funds through brokerage firms or financial professionals have the ability to bring a FINRA arbitration claim to recover their losses.  FINRA Notice to Members 10-22 provides specific requirements that brokerages and financial professionals must undertake when conducting due diligence on privately held securities, before recommending them to investors.  Moreover, the FINRA suitability rule requires that brokerages and financial professionals make both reasonable basis and customer specific suitability determinations prior to recommending securities to customers.

 

According to SEC filings, the following brokerage firms receives compensation for the sale of the iCap Northwest Opportunity Fund, LLC and have the aforementioned due diligence and suitability obligations:

 

• Titan Securities
• Claraphi Advisory Networks, LLC
• Ausdal Financial Partners, Inc.
• Advisory Group Equity Services, Ltd.
• Bradley Wealth Management, LLC
• Center Street Strategies Securities, Inc.
• Chauner Securities, Inc.
• Freedom Investors Corp.
• Gardner Financial Services, Inc.
• IBS Financial Services, Inc.
• Meyers Associates, LP
• Pariter Securities, LLC
• Stillpoint Capital, LLC
• Wall Street Strategies, Inc.

 

These due diligence obligations are absolute but are often overlooked by brokerage firms because they don’t have the resources or infrastructure to effectively conduct due diligence.  It is often passed along to third-parties, who fail to meet the exacting standards of FINRA Notice to Members 10-22.

 

The Wolper Law Firm, P.A. Offers Free Consultations to Discuss Losses in the iCap Securities

 

The Wolper Law Firm represents investors nationwide in securities litigation and arbitration on a contingency fee basis.  Matt Wolper, the Managing Principal of the Wolper Law Firm, is a trial lawyer who has handled more than 1,000 securities cases during his career involving a wide range of products, strategies and securities. Prior to representing investors, he was a partner with a national law firm, where he represented some of the largest banks and brokerage firms in the world in securities matters. We can be reached at (800) 931-8452 or by email at mwolper@wolperlawfirm.com.