Securities America Non-Traded REIT Lossses.
The Pennsylvania Department of Banking and Securities is currently investigating Securities America Inc. related to its sale of non-traded real estate investment trusts (REITs) to investors since 2007. This most recent investigation comes on the heels of a similar investigation by the Massachusetts Securities Division where Securities America agreed to pay millions of dollars in restitution to clients who were recommended non-traded REITs from 2005 to 2013.
According to the Massachusetts Securities Division consent order, Securities America was selling non-traded REITS to its clients in excess of the Massachusetts concentration limits for securities of this nature. Massachusetts has a rule that an investor's purchase of REITs cannot be more than 10% of that person's liquid net worth.
Indeed, Securities America was fined $150,000 by Massachusetts and agreed to pay close to $8.4 million in restitution to clients. At this time, it is unclear how or why the Pennsylvania Department of Banking and Securities is seeking to discipline Securities America.
A real estate investment trust, or REIT, is a corporation, trust or association that owns and/or manages income-producing real estate, including residential and commercial real estate. One of the primary features of a REIT is that it enables investors to pool capital in order to purchase a portfolio of properties—which the typical investor might not otherwise be able to purchase individually.
REITs are sold to the public in two forms: traded and non-traded. A traded REITs acts like it sounds and investors are able to freely buy and sell the REIT, like a stock, on a public exchange. On the other hand, non-traded REITs are not traded on a public exchange and usually carry redemption restrictions that do not allow an investor to transact the REIT freely.
Non-traded REITs, in particular, can present various risks to unsophisticated investors and FINRA has issued an Investor Alert warning investors of some of the potential risks. FINRA highlighted the following risks:
Lufrano Law, LLC is currently investigating claims against Securities America Inc. related to the sale of non-trade REITs. If you lost money investing in non-traded REITs with Securities America, then Lufrano Law, LLC may be able to help your recover some or all of your losses through a FINRA arbitration claim. Please contact us today for a free, no-commitment consultation.
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