Claim Alleges Financial Advisor David Smith Concentrated 73% of Investors’ Account in Illiquid CMCT Preferred Stock
BEVERLY, MA, UNITED STATES, November 11, 2026 /EINPresswire.com/ — National investment loss and securities law firm KlaymanToskes announces the filing of a $200,000 Financial Industry Regulatory Authority (“FINRA”) arbitration claim against Cambridge Investment Research, Inc. (“Cambridge”) on behalf of a married couple who suffered substantial losses in Creative Media & Community Trust Corporation (“CMCT”) preferred stock recommended by Cambridge financial advisor David Christopher Smith (CRD# 3132841). The case is FINRA Case No. 26-02562.
KlaymanToskes currently represents numerous investors in claims involving CMCT preferred stock and other alternative investments. Investors who suffered losses in CMCT recommended through Cambridge, David Smith, or another financial advisor or brokerage firm are encouraged to contact attorney Lawrence L. Klayman, Esq., at 888-997-9956 or investigations@klaymantoskes.com for a free and confidential consultation to discuss their potential recovery options.
According to the Statement of Claim, the investors sought dependable income and preservation of principal as they approached retirement. In June 2023, broker David Smith allegedly liquidated approximately $210,000 in municipal bond funds and used the proceeds to purchase CMCT Series A1 Preferred Stock, concentrating 73% of the couple’s brokerage account in a single illiquid investment.
The claim alleges that Smith presented CMCT as an income-producing preferred stock offering a 7.58% dividend without adequately disclosing that the shares were not publicly traded, dividends could be suspended, and redemption requests could be satisfied with CMCT common stock rather than cash.
Despite significant deterioration in CMCT’s financial condition and multiple reverse stock splits, Cambridge allegedly continued reporting the preferred shares at their original $210,000 value on the investors’ account statements. In March 2026, CMCT converted the couple’s preferred shares into common stock, which Cambridge’s March 31, 2026 account statement valued at just $14,112.15.
The claim further alleges that Cambridge failed to reasonably supervise Smith despite his prior regulatory history, which included six federal tax liens totaling approximately $239,000, a customer complaint involving unsuitable annuity recommendations, and a Massachusetts regulatory order requiring heightened supervision. According to the claim, Cambridge permitted Smith to recommend the concentrated CMCT investment without adequate supervisory review.
“These investors relied on their financial advisor to preserve their savings and provide dependable income as they approached retirement,” said Lawrence L. Klayman, Managing Partner of KlaymanToskes. “Brokerage firms have a responsibility to ensure that investment recommendations are appropriate for their customers and to exercise heightened scrutiny when a financial advisor has a history of regulatory concerns.”
The claim alleges unsuitable investment recommendations, inadequate due diligence, misrepresentations and omissions, negligence, breach of fiduciary duty, violations of Regulation Best Interest, and failure to supervise. The investors seek $200,000 in damages, plus additional relief.
Investors who suffered losses involving CMCT preferred stock recommended by David Smith, Cambridge Investment Research, or another brokerage firm are encouraged to contact KlaymanToskes at 888-997-9956 or investigations@klaymantoskes.com for a free and confidential consultation to discuss their potential recovery options.
About KlaymanToskes
KlaymanToskes is a leading national securities law firm which practices exclusively in the field of securities arbitration and litigation on behalf of retail and institutional investors throughout the world in large and complex securities matters. The firm has recovered over $650 million in Securities Litigation and FINRA Arbitration matters. KlaymanToskes has office locations in California, Florida, Nebraska, New York, and Puerto Rico.
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Contact
Lawrence L. Klayman, Esq.
KlaymanToskes, PLLC
+1 888-997-9956
investigations@klaymantoskes.com
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