Posts tagged ‘Inland American REIT losses’

LPL sued by Massachusetts securities regulators over non-traded REIT sales.

According to reports, Massachusetts securities regulators have sued LPL Financial, LLC over sales practices of brokers regarding non-traded REITs.

Apparently the Secretary of the Commonwealth charged LPL Financial with a failure to supervise registered reps who sold the nontraded REITs in violation of both state limitations and the company’s rules. The Securities Division also charged LPL Financial with dishonest and unethical business practices.

The charges stem from sales of $28 million of nontraded REITs to almost 600 clients from 2006 to 2009. Of those transactions, the Securities Division found that 569 had regulatory violations. Those included sales made in violation of Massachusetts 10% concentration limits; sales made in violation of prospectus requirement; and sales made in violation of LPL compliance practices.

The Massachusetts probe focused on seven non-traded REITS sold by LPL brokers.  Of the REITs listed in the complaint, the largest amount of sales was for Inland American Real Estate Trust Inc. (Massachusetts investors allegedly put at least $20.1 million in Inland American).  (Inland American is separately the focus of a fact-finding investigation by the Securities and Exchange Commission).

Massachusetts is seeking full restitution to clients in the state who were sold REITs allegedly in violation of state and prospectus requirements. It is also seeking an unspecified administrative fine against the firm.

The White Law Group has been filing FINRA claims involving non-traded REITs for some time and continues to investigate claims similar to those described by the State of Massachusetts in its complaint.

Financial advisors and broker-dealers have a duty to their clients to perform the necessary due diligence on an investment before offering it for sale to their clients and to ensure that any investment recommendation that is made is suitable in light of the client’s age, investment experience, net worth, and investment objectives.

The White Law Group has found that financial advisors often improperly sell non-traded REITs because of the large commissions involved (LPL apparently received at least $1.8 million in commissions on the deals during the period in question in the Massachusetts complaint).  Other problems with non-traded REITs are that they do not trade on exchanges, provide no liquidity for long periods of time and carry fees of as much as 15 percent.

If you invested in a non-traded REIT with LPL Financial and would like to discuss your litigation options, please call the securities attorneys of The White Law Group at 312/238-9650 for a free consultation.

The White Law Group is a national securities fraud, securities arbitration, and investor protection law firm with offices in Chicago, Illinois and Boca Raton, Florida.

For more information on The White Law Group, visit http://www.whitesecuritieslaw.com.

Recovery of Inland American REIT Losses

Have you suffered investment losses in Inland American REIT? If so, the REIT fraud attorneys of The White Law Group may be able to help you recover your losses through FINRA arbitration.

The SEC recently announced that it is looking at activity of Inland American REIT to determine if the REIT committed violations related to management fees, the timing and amount of distributions paid to investors, and transactions with affiliates.  It is unclear at this time what the investigation will mean for the value of Inland American REIT but obviously this is not good news.

The White Law Group is investigating potential securities fraud claims involving broker-dealers’ improper recommendation that investors purchase risky non-traded REIT investments, including Inland American REIT.

FINRA has stepped up its regulation of the sale of REITs and, in particular, the ways in which broker/dealers marketed and sold the products to investors. In many cases, and notwithstanding the risk of REIT investments, broker-dealers marketed these investments as safe and secure.

REITs typically pay a high commission – often as much as 15% (which often explains the stockbroker’s motivation in recommending the REIT investment to the investor).

Due to the relatively high interest or dividend offered by non-traded REITs like Inland American REIT, retired investors are often attracted to these products.  Unfortunately, in addition to be risky investments, non-traded REITs are also illiquid (limiting investors ability to access their own money for unforeseen expenses).

Another problem with non-traded REITs is that broker-dealers are not required to frequently update the current price of the investment.  This often leads investors to believe that there REIT investment is doing well even though the widespread real estate market collapse would indicate otherwise.

To determine whether you may be able to recover investment losses incurred as a result of your purchase of a risky REIT investment, please contact The White Law Group at 312-238-9650.

The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Boca Raton, Florida.

For more information on The White Law Group, visit http://www.whitesecuritieslaw.com.

SEC Investigating Inland American REIT

According to the Wall Street Journal, the Securities and Exchange Commission is investigating Inland American Real Estate Trust (Inland American REIT) for potential violations of federal securities laws.

According to the report, the SEC is looking at activity of Inland American REIT to determine if the REIT committed violations related to management fees, the timing and amount of distributions paid to investors, and transactions with affiliates.

Inland American is the largest of the nontraded REITs currently available and the investigation casts a large shadow on the nontraded REIT market.

The White Law Group continues to investigate the liability that brokerage firms have for recommending nontraded REITs like Inland American REIT.

Brokerage firms have a fiduciary duty to perform adequate due diligence on any investment that they recommend and to ensure that the investments recommended are appropriate in light of the client’s age, investment experience, net worth, and investment objectives.

The problems we see involving nontraded REITs generally relates to the financial advisor’s failure to adequately disclose the risks and illiquidity of these investments (as well as the high commission he/she earned for selling the REIT).

One of the other main complaints we continually hear relates to the problems in the valuation of these investments.  Finra rules currently mandate that sponsors of nontraded REITs establish an estimated per-share valuation within 18 months after the REIT stops raising money from investors. The problem with this language is that fund raising often lasts for years which results in the per-share valuation potentially remaining unchanged for years.

The White Law Group’s investigation into the improper sales of non-traded REITs includes, but is not limited to, recommendations to invest in the following REITs: Behringer Harvard REIT I, Inland America Real Estate Trust, Inland Western Retail Real Estate Trust, Wells Real Estate Investment Trust II, Piedmont Office Realty Trust, Desert Capital REIT, Apple REIT, Crystal River REIT, and KBS REIT.

To determine whether you may be able to recover investment losses incurred as a result of your purchase of Inland American REIT, please contact The White Law Group at 312-238-9650.

The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Boca Raton, Florida.

For more information on The White Law Group, visit http://www.whitesecuritieslaw.com.