Investment fraud lawyers are currently investigating claims on behalf of investors who suffered significant losses in two mortgage REITs, American Capital Agency and American Capital Mortgage, following the announcement of 2013 first-quarter results. For the first quarter of 2013, American Capital Mortgage suffered losses of $0.56 per share and American Capital Agency suffered losses of $1.57 per share.
Reportedly, these losses are a result of increasing interest rates combined with a drop in mortgage-backed securities values and the secondary offering’s failure to foresee these changes. However, mortgage REITs, or real estate investment trusts, are not suitable for all investors. Prior to recommending an investment to a client, brokers and firms are required to perform the necessary due diligence to establish whether the investment is suitable for the client, given their age, investment objectives and risk tolerance.
Financial Industry Regulatory Authority rules have established that firms have an obligation to fully disclose all the risks of a given investment when making recommendations. Furthermore, securities arbitration lawyers say brokerage firms must, before approving an investment’s sale to a customer, conduct a reasonable investigation of the securities and issuer.
American Capital Mortgage is a hybrid mortgage REIT and smaller than American Capital Agency, an agency-only mortgage REIT. According to investment fraud lawyers, many investors are drawn to mortgage REITs because of appealing dividends but don’t understand that the investment must use leveraging to generate revenues. This presents a certain kind of risk that makes the investment unsuitable for many individuals.
If you suffered significant losses as a result of your investment in American Capital Agency, American Capital Mortgage or another mortgage REIT that was unsuitable for you, you may be able to recover your losses through securities arbitration. To find out more about your legal rights and options, contact a securities arbitration lawyer at The Law Office of Christopher J. Gray at (866) 966-9598 for a no-cost, confidential consultation.