An arbitration claim filed with the Financial Industry Regulatory Authority on behalf of seven households provides an inside look at the losses suffered by some of the San Luis Obispo County residents who were invested in the APEX Equity Options Fund.
Collectively, the households invested more than $5 million in the fund.
One retired couple in Los Osos mortgaged their home in the amount of $506,000 and invested $300,000 in APEX. The claim alleges that the husband suffered a nervous breakdown as a result of the losses.
Another woman, a San Luis Obispo retired nurse, mortgaged a condo she owns and borrowed money against a life insurance policy. She has “been forced to return to nursing,” according to the claim.
Another couple in Arroyo Grande borrowed money against their rental units to invest in APEX.
The fund, which was capped at a maximum size of 99 households, required a minimum investment of $250,000. Several investors who spoke with The Tribune made initial investments significantly below the threshold and later located funds to meet the minimum size. They did so, according to the arbitration claim, “at the recommendation of their broker … (Jeffrey) Forrest.”
Forrest’s endorsement of APEX was persuasive to investors such as Sherri Parkinson, a stay-at-home mother of two children. She and her husband, Dave, an engineer, invested $340,000-a significant portion of their retirement savings – in APEX in October 2005 because “we thought he (Forrest) was looking out for our best interest,” said Parkinson, who is a claimant in the arbitration case.
“Rich or poor, sophisticated or unsophisticated, every investor was guaranteed over and over again that their principal was protected,” said Philip Aidikoff of Beverly Hills-based Aidikoff, Uhl & Bakhtiari, a lawyer representing the investors in the arbitration case. “These people were told that the only risk was how much money they would make. It was just a lie, period.”
“I am truly sorry and feel a great sense of remorse with what has occurred,” Forrest told The Tribune in an interview. “My near and dear clients, my family, my entire livelihood and financial well-being are at risk. There is no way I would have put them at risk.”
Parkinson said she wishes she had done more of her own research when seeking an investment adviser.
“We had no idea that there was so much publicly available information. People should look up their brokers to see if there have been problems with them in the past,” Parkinson said. She also advises other clients to ask their investment adviser how they are getting paid.
“We were assured over and over again that our principal was protected, and we trusted that,” Parkinson said. “We just feel like we were defrauded. I don’t want other people to end up in this situation.”