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Top local business stories of 2007: For sapped local investors, a dark year

12/27/2007

San Luis Obispo Tribune

This is one of The Tribune’s Top 10 local business stories of 2007. The topics were chosen and ranked by The Tribune’s business staff. Today at No. 6, a story about local investors losing millions of dollars in an equity fund. The No. 5 story was incorrectly published Wednesday.

For some San Luis Obispo County investors who collectively lost millions of dollars in an equity investment, 2007 meant dealing with financial trouble.

Many clients of Jeffrey Forrest and Wealth Wise LLC had used their savings and, in some cases, borrowed against the value of their homes to invest in the APEX Equity Options Fund, a $46 million fund that was wiped out in August, according to legal documents.

Three arbitration cases have been filed with the Financial Industry Regulatory Authority against Forrest and Associated Securities, an El Segundobased broker-dealer, and a fourth case is under way, said Phil Aidikoff, an attorney with Aidikoff, Uhl & Bakhtiari in Beverly Hills. A civil suit has been filed as well by a Hunting-ton Beach investor.

Attorneys are also pursuing Associated Securities, where Forrest had been registered until this year, for not supervising or controlling his actions, which is required by the regulators.

Investors allege that Forrest, who is charged in the cases with breach of fiduciary duty and fraud, assured them that the principal they invested in the APEX fund would be protected. But attorneys say that wasn’t the case. They also allege that Forrest sold investments in five businesses -Kennedy Club Fitness, San Luis Trust Bank, Florida Capital Real Estate, BOOMj, an online social networking site for baby boomers, and Estate Financial, a hard-money lender based in Paso Robles – that were unsuitable for some of his clients.

Aidikoff said an unsuitable investment does not mean that the investment itself is of poor quality; rather, it’s an investment that may not be advisable for some people. According to the case filings, Forrest had a responsibility to know his clients’ goals and risk tolerance, and to act in their best interest.

Aidikoff said FINRA will appoint arbitration panels, and hearing dates will be set. The first hearing could be in the fall, Aidikoff said.

Forrest was reached by The Tribune on Wednesday, but he declined to comment.


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