Pending FINRA Case Alleges Broker Phillip Kao Misled Investor on Real Estate Deal

Brokers are entrusted with their clients’ financial futures and are expected to offer investment guidance that aligns with each individual’s goals and risk tolerance. But when that responsibility is mishandled, the fallout can be both emotional and financial.

Phillip C. Kao (CRD#: 4654233), a broker currently registered with Arete Wealth Management in San Rafael, California, is the subject of a pending Financial Industry Regulatory Authority (FINRA) arbitration involving allegations of unsuitable investment advice related to a real estate security. The dispute raises broader concerns, especially when considered alongside a prior complaint alleging oversight failures.

Sonn Law Group is actively reviewing potential claims involving Kao’s recommendations and encourages affected investors to contact the firm for a free, confidential consultation.

Pending FINRA Case Involves Risky Real Estate Security

In February 2024, a customer filed a FINRA arbitration claim (Case #24-00296) against Phillip Kao, citing an investment made in 2014 while he was with LPL Financial. The customer alleges that Kao recommended a real estate security that was not suitable based on their financial objectives and risk tolerance.

While the specific damages are not disclosed, the claim notes that losses are believed to exceed $5,000, which is the threshold for reportable complaints under FINRA rules. The arbitration is currently pending, and no findings or conclusions have been made at this stage.

The case adds to growing concerns about whether investors are receiving adequate guidance when being introduced to complex, illiquid products like real estate investments.

Broker’s Track Record Includes Earlier Client Dispute

In addition to the pending real estate arbitration, Phillip Kao’s record includes a past customer complaint that raises further concerns about communication and portfolio oversight. Filed in 2016, the written complaint alleged that Kao failed to properly supervise the client’s investments, left their portfolio overly concentrated in stocks and did not notify them upon his departure from the firm.

The activity period cited in the complaint was between November 2015 and September 2016, during Kao’s time with LPL Financial. Although the firm ultimately denied the claim, and the case was closed without settlement, the nature of the allegations, especially regarding lack of oversight and client communication, adds context to the current scrutiny Kao is facing.

Tracing Griffin’s Registration and Licensing History

Phillip Kao has been registered with Arete Wealth Management in San Rafael, California, since December 2024. His career in the financial industry spans over two decades, during which he has worked for several well-known firms.

Kao’s previous affiliations include:

• Portsmouth Financial Services (2021-2024)
• Woodbury Financial Services (2015-2021)
• LPL Financial (2010-2015)
• NEXT Financial Group (2008-2010)
• WAMU Investments (2003-2008)

He has passed the Series 7 (General Securities Representative), Series 63 (Uniform Securities Agent State Law Exam) and the Securities Industry Essentials (SIE) exam. However, Kao has not passed any supervisory or principal-level exams and is not licensed to act in a supervisory capacity.

Outside of his brokerage work, Kao is involved in other financial activities. He owns and manages a rental property in Ohio and holds an insurance license. As part of that license, he promotes products like Nationwide Life Insurance and fixed indexed annuities.

The Risks of Real Estate Securities

Real estate securities, such as non-traded real estate investment trusts (REITs), are investment products tied to property markets. While they may offer the potential for income or diversification, they also come with significant risks that are often overlooked.

These investments are typically illiquid, meaning investors can’t easily sell or access their money for extended periods. They often involve complex structures with limited transparency, making it difficult to assess performance or value. Additionally, their returns can be highly sensitive to broader market cycles, property valuations and interest rate changes.

Because of these risks, brokers are required under FINRA Rule 2111 to evaluate whether a real estate security is suitable for a client’s financial situation, investment goals, risk tolerance and liquidity needs. When these obligations aren’t met, investors may be exposed to losses they were never prepared to handle.

What Investors Should Watch For

Even a single complaint or arbitration can be a sign that something went wrong. If you’ve worked with a broker and experienced any of the following, it may be worth reviewing your account:

• You were told an investment was “safe,” “guaranteed” or “low risk” without being given full disclosure of potential downsides.
• Your portfolio became overconcentrated in a single product or asset class, such as real estate securities.
• You were not informed when your broker left their firm or were left without clear support or follow-up on your account.
• You received vague, incomplete or confusing information about how an investment worked or what it entailed.
• You’ve been contacted about a class action, arbitration or other legal matter involving your advisor or one of your past investments.

If any of these situations sound familiar, consider having your investments reviewed by a qualified securities attorney. These red flags can often point to larger issues of unsuitability, misrepresentation or lack of oversight.

Concerned About Your Investments? Sonn Law Group Can Help

If you suffered losses after following Phillip Kao’s investment advice, you may have a right to seek recovery. Sonn Law Group has decades of experience representing investors in FINRA arbitration and securities litigation, including cases involving illiquid and unsuitable products.

Led by nationally recognized securities attorney Jeffrey Sonn, our firm has helped clients across the country recover millions in losses caused by broker misconduct, misrepresentation and supervisory failures.

We offer free, confidential consultations and work on a contingency basis. That means you pay nothing unless we recover money for you.

Contact us today to discuss your potential claim and learn more about your legal options.