FINRA is proposing amendments that will change the way that broker-dealers show the value of illiquid investments such as non-traded REITS on clients’ account statements. The proposal includes requiring broker-dealers to subtract upfront fees and expenses that are deducted from the offering proceeds if par value is listed as the estimated value of the shares. Currently, shares of non-traded REITs are listed at par.
Other proposals would cause broker-dealers to use par value for the investment only under the initial offering period, and not during the secondary period. These proposed changes will inevitably clarify any inaccurate estimates of the per share value. FINRA has had the current estimation process on its radar since as late as 2009 because the current process can be misleading. In 2009 FINRA issued notice to broker-dealers prohibiting them from using data that were more than 18 months old to estimate the value of a non-traded REIT.
Before 2009, broker-dealers routinely listed the value of non-traded REITs at par. This issue is present particularly with clients that invested with David Lerner Associates Inc. in which investors last month received their statements that did not show an estimated value. David Lerner Associates Inc. received a complaint from FINRA at the end of May for misleading investors and marketing unsuitable investment products to them.
Eccleston Law represents individual and institutional investors nationwide to recover their investment losses caused by unsuitable investment recommendations, breach of fiduciary duty, negligence or other misconduct. We have extensive experience representing investors in arbitration and litigation disputes with securities broker-dealers and investment advisory firms, and have recovered tens of millions of dollars for investors.
If you have suffered losses in non-traded REIT or other illiquid investment, please contact Eccleston Law Offices to discuss your recovery options at (312) 332-0000.
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