March, 2025 | Based in Houston, TX
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Key Facts About Gihan Anil Fernando
- Full Name: Gihan Anil Fernando
- CRD Number: 4469669
- Current Location: Houston, Texas
- Current Employer: Cetera Investment Services LLC and Cetera Investment Advisers LLC
- Office Address: 5433 Westheimer Rd, Suite 800, Houston, TX 77056
- Registration Status: Currently registered with FINRA and Texas
- State Licenses: Texas
- Experience: In the industry since 2002
- FINRA BrokerCheck: 69 customer disputes and 1 regulatory action
- Previous Employers: BOK Financial Securities, Inc. (2003-2023), Morgan Stanley (2002-2003)
- Ability to Recover Losses: Investors who lost money may still be eligible for FINRA arbitration
Detailed Investigation into Gihan Fernando’s Investment Activities
The financial services industry is built on trust, with investors relying on their advisors to provide sound guidance and act in their best interests. However, when that trust is broken, the consequences can be devastating for individual investors. Our firm is currently investigating multiple allegations against Gihan Anil Fernando (CRD# 4469669), a financial advisor currently registered with Cetera Investment Services LLC and Cetera Investment Advisers LLC in Houston, Texas.
Fernando has an alarming 69 customer disputes on his regulatory record, with the vast majority revolving around alleged misrepresentations of investment products, particularly non-traded REITs (Real Estate Investment Trusts) and Business Development Companies (BDCs). These illiquid alternative investments became problematic for investors when the real estate market faced turbulence during the COVID-19 pandemic.
Our investigation has revealed a pattern of alleged misconduct primarily occurring between 2015 and 2018 while Fernando was employed at BOK Financial Securities, Inc. During this time, investors claim Fernando misrepresented the nature, risks, and features of these complex investment products. Many of these allegations have resulted in settlements totaling millions of dollars.
Regulatory Action and Pattern of Customer Complaints
In addition to the numerous customer disputes, Fernando was also subject to a regulatory action by the Texas State Securities Board. In July 2024, Fernando was reprimanded for recommending REITs to clients without fully understanding the product, constituting an inequitable practice in securities sales. This action underscores concerns about his understanding of the complex products he was selling to clients.
The pattern of customer complaints against Fernando is particularly troubling:
- A staggering 69 settled customer disputes, with one additional pending complaint
- Settlement amounts ranging from approximately $16,000 to over $830,000
- Allegations consistently involving misrepresentation of investment features
- Total settlements exceeding $7 million based on available records
- All complaints centered on similar alternative investments (REITs and BDCs)
While Fernando has maintained that he was following his employer’s directives and that BOK Financial had approved these products, the volume of complaints raises serious questions about the suitability of these recommendations for his clients.
Understanding the Problematic Investments
The investments at the center of these allegations are non-traded REITs and Business Development Companies, which have several characteristics that make them potentially unsuitable for many retail investors:
Non-Traded REITs
Non-traded REITs are real estate investment vehicles that, unlike their publicly traded counterparts, do not trade on a national securities exchange. This results in:
- Limited liquidity: Investors may find it difficult or impossible to sell their shares when needed
- High fees: Non-traded REITs typically carry fees of 12-15%, significantly reducing investor returns
- Valuation challenges: Without market-based pricing, determining true value is difficult
- Dividend sustainability issues: Initial high dividend rates may not be sustainable long-term
- Lack of transparency: Limited disclosure requirements compared to publicly traded securities
Business Development Companies (BDCs)
BDCs are investment vehicles designed to invest in small and mid-sized businesses. They present their own set of risks:
- Complex structures: Often difficult for average investors to fully understand
- Interest rate sensitivity: Vulnerable to interest rate fluctuations
- Credit risk: High exposure to potential defaults of underlying borrowers
- Concentration risk: Often concentrated in specific sectors or industries
- High fees: Management fees and incentive fees can significantly impact returns
The complexity of these investments makes them particularly problematic when not fully explained to investors, especially those seeking income during retirement. The alleged misrepresentations by Fernando primarily centered on downplaying liquidity risks and overstating the safety and reliability of these investments.
Red Flags in Fernando’s Investment Practices
Our investigation has identified several red flags in Fernando’s investment practices that should have alerted investors:
- High concentration in alternative investments: Placing excessive portions of client portfolios in illiquid alternatives
- Misrepresentation of liquidity: Allegedly downplaying the difficulty of accessing invested capital
- Failure to disclose risks: Not adequately explaining the potential downsides of these complex investments
- Regulatory reprimand: The Texas State Securities Board finding that Fernando recommended products he didn’t fully understand
- Consistent pattern of complaints: The sheer volume of similar complaints indicates systemic issues
- Targeting income-seeking clients: Many affected investors appear to have been retirees seeking income
Most concerning is Fernando’s own statement in response to the complaints, where he indicates he was following his firm’s direction and selling products approved by BOK Financial. This raises questions about whether he was exercising independent judgment regarding the suitability of these investments for his specific clients.
Legal and Regulatory Framework
Financial advisors like Fernando operate within a strict regulatory framework designed to protect investors. Several key regulations appear to have potentially been violated based on the allegations:
FINRA Rule 2111 (Suitability)
This rule requires that financial advisors have a reasonable basis to believe that a recommended transaction or investment strategy is suitable for the customer based on the customer’s investment profile. The numerous complaints suggest potential violations of this fundamental obligation.
FINRA Rule 2010 (Standards of Commercial Honor)
This rule requires brokers to observe high standards of commercial honor and just and equitable principles of trade. Misrepresenting investment features would constitute a violation of this standard.
FINRA Rule 2020 (Use of Manipulative, Deceptive or Other Fraudulent Devices)
This rule prohibits the use of manipulative, deceptive, or fraudulent devices or contrivances in connection with securities transactions. Misrepresentations of product features could potentially violate this rule.
Fiduciary Duties
Investment advisers have a fiduciary duty to act in the best interests of their clients, provide full and fair disclosure of all material facts, and eliminate or disclose all conflicts of interest. The pattern of complaints suggests potential breaches of these duties.
SEC Regulation Best Interest (Reg BI)
While implemented after many of the transactions in question, Reg BI established an enhanced standard of conduct for broker-dealers. The alleged conduct would likely violate this newer standard as well.
Guidance for Affected Investors
If you were a client of Gihan Fernando and invested in non-traded REITs or Business Development Companies (BDCs), particularly between 2015 and 2018, you may have recourse to recover losses. Here are critical steps to take:
- Review your account statements and investment documents: Identify all investments made through Fernando, particularly alternative investments like REITs and BDCs.
- Document all communications: Gather emails, letters, notes from meetings, marketing materials, and any other communications regarding your investments.
- Calculate your losses: Determine the amount invested versus current value or recovery amount if you’ve already liquidated.
- Understand the time limits: FINRA arbitration claims generally must be filed within six years of the event giving rise to the claim, so prompt action is essential.
- Consider FINRA arbitration: This process is typically faster and less expensive than traditional litigation for resolving investment disputes.
- Consult with a securities attorney: A specialized attorney can evaluate your specific situation and advise on the strength of your potential claim.
It’s important to note that even if you’ve received some return on your investment, you may still have a claim if the investment was unsuitable for your risk profile or if material facts were misrepresented.
Our Approach to Investment Fraud Recovery
Our firm specializes in representing investors who have suffered losses due to broker misconduct or securities fraud. We offer several distinct advantages when pursuing claims against financial advisors like Gihan Fernando:
- Comprehensive forensic analysis: Our team conducts detailed analyses of trading patterns, investment suitability, and compliance with regulatory requirements.
- Experience with alternative investments: We have specific expertise with non-traded REITs and BDCs, understanding their complex structures and the common misrepresentations made during sales.
- Contingency fee structure: We typically work on a “no recovery, no fee” basis, aligning our interests with yours.
- FINRA arbitration expertise: Our attorneys have extensive experience navigating the FINRA arbitration process, where most securities disputes are resolved.
- Extensive documentation analysis: We meticulously review all investment materials, communications, and account statements to build the strongest possible case.
- Industry insider knowledge: Our team includes former industry professionals who understand the inner workings of brokerage firms and their compliance obligations.
Each investor’s situation is unique, and we tailor our approach to your specific circumstances, investment goals, and the particular products recommended by Fernando.
Industry-Wide Implications
The case of Gihan Fernando highlights broader concerns within the financial services industry, particularly regarding the marketing and sale of complex alternative investments to retail investors. Several troubling patterns emerge:
- Firm responsibility: Fernando’s statement that he was following BOK Financial’s directives raises questions about the firm’s due diligence and supervision.
- Sales pressure: The volume of similar sales suggests potential pressure on advisors to sell high-commission products.
- Disclosure inadequacies: The consistent allegations of misrepresentation point to systemic issues with how these products are presented to investors.
- Supervision failures: The pattern of complaints suggests potential breakdowns in the supervisory structure at BOK Financial.
- Product complexity vs. investor sophistication: The case highlights the recurring problem of complex products being sold to investors who may not fully understand their risks.
Regulatory bodies have increasingly focused on these issues, with new rules and enforcement actions targeting the sale of complex products to retail investors. However, cases like Fernando’s demonstrate that investor harm continues to occur despite these efforts.
Ready to discuss your investment losses? If you invested with Gihan Fernando and experienced losses, don’t wait to explore your options. call 800-950-6553 or complete our online form to schedule your no-obligation case evaluation today.
