SII Investments to Pay Restitution to Investors
According to a consent order, the Massachusetts Securities Division has ordered SII Investments Inc., to pay restitution to certain Massachusetts residents for improper REIT sales.
SII Investments Inc., an independent broker-dealer within the National Planning Holdings network, is accused of failing to supervise some of its agents, for allegedly miscalculating their clients’ liquid net worth to increase sales.
For reparation, the Massachusetts regulator has ordered any investor who was improperly sold non-traded REITs by SII will be offered the opportunity to get their money back.
According to the complaint, SII brokers allegedly inflated their client’s liquid net worth by including illiquid annuities with pending surrender fees into the calculation, although SII’s internal policies that products with substantial penalties should not be included in the calculation.
The firm’s suitability and disclosure form for non-traded REITs stated that no more than 10 percent of an investor’s liquid net worth may be invested in any particular non-traded REIT.
From 2011 to 2016 SII sold 93 non-traded REITs to Massachusetts residents with a value of nearly $4.7 million, according to the complaint. SII received commissions of approximately $27,000, while its agents received more than $278,000.
The firm was ordered to pay a $50,000 administrative fine in addition to the restitution.
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