FINRA Issues Investor Alert About the Dangers of Non-Traded REITs

FINRA recently issued an investor alert aimed at highlighting the dangers of non-traded REITs and the potential pitfalls of such investments, such as the illiquidity and high fee structures. 

This second investor alert by FINRA is a sign that the securities regulator has intensified its scrutiny of these products.  Non-traded REITs are typically sold through independent broker-dealers, due to their high commission structures.  Financial advisors may be tempted to recommend these products in unsuitably high concentrations.

FINRA also recently issued a new rule proposal that would change how the value of non-traded REITs was reflected on account statements.  Previously, many broker-dealers showed an "estimated par value", which was typically what the investor purchased the securities for. However, using an "estimated par value" created the illusion of stability, which was often misleading when the book value of the underlying REIT investment declined.

Eccleston Law represents individual and institutional investors nationwide to recover their investment losses caused by securities fraud, 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 are an investor that has suffered losses investing in a non-traded REIT, please contact one of our attorneys at 312-332-0000 to discuss your recovery options.