Securities regulators have taken action against several broker-dealer firms that sold certain Real Estate Investment Trusts (REITs) to their customers but allegedly failed to determine whether such real estate investment programs were appropriate for the investors’ risk profiles, or failed to appropriately disclose the risks surrounding such investments.
Brokers and financial advisors are often drawn to recommending REITs because of the high commissions associated with the transaction. These alternative investments are generally only suitable for savvy investors who are wealthy and sophisticated, because they are complex investment products that are often highly illiquid (meaning investors may be stuck and not able to access their money). Moreover, many illiquid REITs cannot be freely sold in the marketplace. All too often, investors trying to exit or access their money are faced with two bad options: sell the shares directly back to the sponsor at a heavily discounted price or sell the shares for pennies on the dollar through the limited secondary markets.
If you believe you lost money because of unsuitable recommendations, including the addition of REITs to your portfolio, it is important to take action. Peiffer Wolf has represented thousands of victims, and we remain committed to fighting on behalf of investors.
According to the US Securities and Exchange Commission, “[b]ecause they do not trade on a stock exchange, non-traded REITs involve special risks”.
They are illiquid investments, which means that “if you need to sell an asset to raise money quickly, you may not be able to do so with shares of a non-traded REIT.” Moreover, “it can be difficult to determine the value of a share of a non-traded REIT. Non-traded REITs typically do not provide an estimate of their value per share until 18 months after their offering closes. This may be years after you have made your investment. As a result, for a significant time period you may be unable to assess the value of your non-traded REIT investment and its volatility.”
Other significant risks according to the SEC?
FINRA also warns about some risks:
If you have one or more of the following REITs in your portfolio, you should contact Peiffer Wolf immediately:
Peiffer Wolf updates this list constantly, so make sure you bookmark this page!
The Securities Attorneys at Peiffer Wolf often represent investors in non-traded REITs in cases against brokerage firms arising out of inappropriate non-traded REIT investments or out of negligent due diligence practices in connection with certain problematic non-traded REITs.
If you believe you were a victim of investment fraud or broker misconduct, it is imperative to take action. Peiffer Wolf Carr Kane & Conway has represented thousands of victims, and we remain committed to fighting on behalf of investors.