Posts tagged ‘Wells REIT losses’
More Bad News for Wells REIT
It is being reported that Wells Real Estate Funds recently laid off its executive sales staff in a move to cut costs. This is just more bad news for Wells REIT owners worried about whether their investments will bounce back after price drops and dividend cuts.
The White Law Group continues to file FINRA arbitration claims against the brokerage firms that recommended Wells REIT. These claims generally allege that the broker-dealers that sold Wells REIT failed to perform the adequate due diligence on Wells REIT before offering it for sale to their clients.
Brokerage firms have a fiduciary duty to perform adequate due diligence on any investment before offering it for sale to its clients. Based on what is now known about Wells REIT, it does not appear that the firms that sold Wells REIT performed the necessary due diligence on the offering.
Certainly, the extremely high commission offered by Wells REIT to brokerage firms for selling the product may explain the brokerage firms’ motivation in approving an investment with so many issues.
If you are a Wells REIT investor and you would like to discuss your litigation options with a REIT fraud attorney, please call 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.
Can You Recover Wells REIT II Investment Losses after the Share Price Drop?
Are you an investor in the Wells Real Estate Investment Trust II (Wells REIT II) and are disturbed by the recent announcement that the value of your shares in Wells REIT II has dropped more than 25% from the par value of $10 to an estimated $7.47 per share? Are you wondering if you can recover your investment losses in Wells REIT II? The White Law Group may be able to assist you in recovering your non-traded REIT damages through the FINRA arbitration process.
The investmentnews.com reported the drop in share price on November 9th and stated that this drop “highlights regulators’ concerns with nontraded real estate investment trusts.” Among the issues that regulators are concerned with is how the values of shares are listed on non-traded REIT investor statements. We have previously written about a FINRA proposal that is an attempt to require more transparency in how shares are reflected on customer statements and regulate how fast valuations of the investments must take place after the initial offering (http://www.
The reason why FINRA is pushing this proposal is in part because investors in non-traded REITs are often left in the dark about how much their investments are truly worth. While, as the investmentnews.com reports, Wells REIT II announced a new estimated value for the shares “in line with industry standards” and as they promised they would before the end of the year, it also shows how investors can realize that their investment in a non-traded REIT is worth far less than they anticipated overnight. The FINRA proposal also wants the costs and commissions involved in the purchase of non-traded REITs to be reflected in the shares’ initial par value.
This proposal is just one reason FINRA has been paying attention to non-traded REITs this year. They are also paying close attention to 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 – up to as much as 15% – which may, in some cases, explain the stockbroker’s motivation in recommending the REIT investment to the investor. Brokerage firms have a fiduciary duty to perform due diligence on any investment and to insure that an investment is appropriate in light of the investor’s age, investment experience, and investment objectives. If a broker fails in this responsibility, investors may have an actionable claim to recover their losses in a product in a claim through FINRA dispute resolution.
If you are concerned about your investment in the Wells Real Estate Investment Trust II (Wells REIT II) and would like to speak to a securities attorney about your ability to recover your investment losses through FINRA please call our Chicago office 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, please visit our website at http://www.whitesecuritieslaw.
Recovery of REIT Investment Losses
The White Law Group is investigating potential securities fraud claims on behalf of investors involving non-traded REIT investments.
Non-traded REITs are less regulated than other, more traditional investments and often pay a much higher commission than other products. Additionally, non-traded REITs are generally illiquid, making them unsuitable for elderly and retired clients who purchased them at the recommendation of their financial advisor.
Another problem with non-traded REITs is the manner in which they are sold and the disclosures made about the investments to investors. Many investors in non-traded REITs have found themselves blindsided after discovering that their investments were high-risk, illiquid and contained highly specific and lengthy exit clauses.
FINRA is particularly focused on non-traded REITs right now, as it seems that many of the independent brokerage firms are selling these products to their clients. These firms have a fiduciary duty to their clients to research the investments they recommend prior to offering them for sale and to insure that the investments are appropriate for the client. Given the issues involved in non-traded REITs (and the commissions that are paid to the broker and brokerage firm), in many cases it is impossible for a brokerage firm to demonstrate that they have fulfilled their obligation to the client as these investments are simply inappropriate for many investors.
Some examples of non-traded REITs sold to investors by brokerage firms are as follows:
Behringer Harvard REIT I, Inc.
Behringer Harvard Multifamily REIT I, Inc.
Behringer Harvard Opportunity REIT I, Inc.
Behringer Harvard Opportunity REIT II, Inc.
CNL Lifestyle Properties, Inc.
Cole Credit Property Trust, Inc.
Cole Credit Property Trust II, Inc.
Cole Credit Property Trust III, Inc.
Grubb & Ellis Apartment REIT, Inc.
Healthcare Trust of America, Inc.
Inland American Real Estate Trust, Inc.
Inland Western Retail Real Estate Trust, Inc.
KBS Real Estate Investment Trust I, Inc.
KBS Real Estate Investment Trust II, Inc.
Piedmont Office Realty Trust, Inc.
Wells Real Estate Investment Trust II
Blackstone Real Estate Advisors
INREIT Real Estate Investment Trust
The Community Development Trust
If you have questions about a non-traded REIT investment you purchased, the securities attorneys of The White Law Group may be able to help. For a free consultation, call the firm’s Chicago office 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, please visit our website at http://www.whitesecuritieslaw.com.
Wells Investment Securities Sanction Forthcoming?
According to the Investment News, the Financial Industry Regulatory Authority Inc. is prepared to spank the broker-dealer arm of one of the largest sponsors of non-traded real estate investment trusts (REITs) for allegedly failing to meet standards for advertising and keeping client information safe.
In a filing with the Securities and Exchange Commission last Friday, Wells Timberland REIT Inc. said that Finra in March notified its broker-dealer manager, Wells Investment Securities Inc., about its preliminary decision to recommend a disciplinary action against the broker-dealer.
Wells Real Estate Funds Inc. is one of the largest sponsors of investments in the non-traded REIT industry, with $11 billion in assets and 250,000 investors. Leo Wells, its founder and chairman, is well known in the independent broker-dealer industry.
The matter has been ongoing since August, when Finra notified Wells Investment Securities that it had made a preliminary decision to discipline the firm, according to the filing.
In its SEC filing, Wells Investment Securities said it “intends to vigorously defend these charges.”
At the end of last year, the Wells Timberland REIT had $360 million in assets.
Wells’ REITs are extremely popular with independent broker-dealers, and it has as many as 200 selling agreements with such firms. The Wells Core Office Income REIT Inc. is another product sold by independent broker-dealers.
Wells has been down this path before. In October 2003, Finra’s precursor, NASD, sanctioned Wells Investment Securities for improperly rewarding broker-dealer reps who sold the company’s REITs. Those rewards included lavish entertainment and travel perquisites. At the time, the regulator also censured Mr. Wells and suspended him from acting in a principal capacity for one year.
If you have questions about a Wells REIT you purchased, The White Law Group may be able to help. The firm is currently representing numerous REIT investors in claims against the brokerage firm that recommended the REIT. To speak with an attorney about your particular situation, please call 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. With over 30 years of securities law experience, including experience working at FINRA (f/k/a the NASD) and the SEC, The White Law Group has the expertise to help investors defrauded in securities, investment and financial business transactions.
For more information on The White Law Group, please visit our website at http://www.whitesecuritieslaw.com.