September 28, 2011 Comments (0) Blog, Securities Fraud

FINRA Proposal to Insist on Faster Valuations of Non-traded REITs

According to the, FINRA “is putting the finishing touches on a rule proposal that would shorten the amount of time that broker-dealers have to come up with estimated valuation of a nontraded REIT.”

The Financial Industry Regulatory Authority (FINRA) has been paying very close attention to REIT investments over the past year. This upcoming proposal seems a natural progression following the complaint FINRA filed in May related to the Apple Real Estate Investment Trusts and David Lerner Associates, Inc.  The regulatory agency’s complaint stated “that the longtime $11 a share value of Apple real estate investment trusts was unreasonable in the face of market fluctuations and other events.”

The problem currently is that “At the moment, nontraded REITs have a lengthy grace period to be valued at par before establishing an estimated market value.” During that period, the par value (value paid for the shares) is listed on statements and not the current market value of their investment. According to the, “REIT sponsors commonly extend the offering period to sell more shares to investors, pushing the deadline for an updated market valuation.” During this time, which may be as long as 4 or 5 years, investors are largely in the dark about the true value of their investment in the Non-traded REIT.

Sources indicate that the new FINRA rule proposal will significantly reduce the amount of time that a Non-traded REIT can continue to show par value on customer statements and continue to sell shares at that price to new investors.

The White Law Group is currently representing investors in many claims involving non-traded REITs. The firm is currently investigating the manner in which brokerage firms have sold non-traded REITs.

If you are concerned about your investment, the securities attorneys of The White Law Group may be able to help.  For a free consultation, please 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

0 Responses to FINRA Proposal to Insist on Faster Valuations of Non-traded REITs

  1. […] The 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 (…). […]

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