According to reports, five brokerage firms agreed to pay an additional $10.7 million in restitution to investors who purchased non-traded real estate investments (REITs). Back in May the five firms agreed to pay $6.1 million in restitution and $975,000 collectively in fines, following an investigation by Massachusetts regulators into the sale of non-traded REITs.
The payments from five firms involved include 7.6 million from Securities America, $1.6 million from Ameriprise Financial Services, $841,000 from Lincoln Financial Advisors, $534,000 from Commonwealth Financial Networks, and $125, 000 from Royal Alliance Associates. With this second round of restitution the amount of money returned to investor’s totals more than $21 million.
A sixth firm, LPL Financial, agreed to a second restitution payment of $2.6 million earlier this year, which brings their total to $4.8 million. For more on LPL Financial read our previous post here.
Massachusetts regulators allege that these brokerage firms were improperly selling non-traded REITs between 2005 and present. Specifically, that some brokerage firms violated state securities law and sold REITs that exceeded 10% of the investors liquid net worth.
Non-traded REITs are complex and high risk investments that are incredible hard to sell should a person want out of the investment. In addition, brokerage firms often earn extremely high commissions of REIT sales which may explain why so many of these investments were sold to inappropriate investors.
The White Law Group continues to investigate potential arbitration claims against the firms that pushed these high-risk investments.
Brokerage firms have a fiduciary duty to make investment recommendations that are suitable for clients given their age, net worth, risk tolerance and investment objectives. Firms that overlook suitability requirements can be liable for investment losses.
If you suffered losses in a non-traded REIT 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 https://www.whitesecuritieslaw.com.