UNLISTED REITS TO INVESTORS – CONTINUED INVESTIGATION OVER SALES PRACTICES

Zamansky LLC continues investigating sales to investors of non-publicly traded or unlisted real estate investment trusts (REITs).  Non-traded REITs do not trade on a stock exchange, and are relatively illiquid investments.

On December 12, 2012, the Massachusetts Securities Division filed an Enforcement Action against LPL Financial for violating law and the firm’s compliance policies in connection with $28-million in sales of non-traded REIT.  The Securities Division is charging LPL for compliance and sales violations in nearly 600 REIT transactions with Massachusetts residents between 2006 and 2009.  Almost all those REIT transactions violated state securities regulations or LPL’s own compliance practices, the Massachusetts Securities Division alleged.

Since 2000, unlisted REITs raised nearly $80 billion from investors and some of the largest unlisted REITS are managed by Behringer Harvard, Inland Western, Inland America, Wells Real Estate Trust, Lightstone, CNL Income Properties, Hines Real Estate Trust, W.P. Carey, Cole Credit Property Trust, Piedmont Office Realty Trust, KBS Realty, Corporate Properties of America,  and American Real Estate Trust.

Firms such as LPL Financial, Ameriprise and other financial advisors which have sold REITs to retired or conservative income-seeking investors are often guilty of sales practice violations.

In March 2009, the Financial Industry Regulatory Authority (FINRA) officially opened an investigation into non-traded REITs with an examination of documentation and data from various brokers who sell the investments.  FINRA is examining the compensation paid to brokers who sold unlisted REITs, which typically can range for 6-8% of the amount invested.  FINRA has fined several firms already such as David Lerner and Wells Investment Services.

Zamansky continues its investigation of unsuitable sales of risky and illiquid REITs for investors, where the investor was misled about the investment or it did not meet the needs for a safe income investment.  Many investors have been stuck holding illiquid REITs while the prices were re-adjusted downwards, resulting in substantial unexpected losses.

If you were sold any REIT by LPL, Ameriprise or other brokerage firm, or have knowledge that would assist in our investigation, please contact Jake Zamansky at 212 742-1414, or jake@zamansky.com.

Zamansky is co-lead counsel for the investors in the David Lerner/Apple REIT class action lawsuit.   Zamansky has also brought individual cases for investors in other REITs and against other brokerage firms.