Inland American REIT Under SEC Investigation; Investors Could Recover Losses in Securities Arbitration

by InvestorLawyers on May 21, 2012

in FINRA,SEC,Securities Fraud,Suitability

Securities arbitration lawyers are currently investigating possible claims on behalf of investors who suffered losses as a result of their purchases of Inland American Real Estate Trust Inc. through a full-service brokerage firm. Inland American is the largest non-traded REIT in the industry. Recently, it has been reported that Inland American is under investigation by the U.S. Securities and Exchange Commission (SEC). The SEC is investigating whether there were violations of federal securities laws regarding Inland American’s fees and administration.

Inland America REIT Under SEC Investigation, Investors Could Recover Losses in Securities Arbitration

Inland American’s quarterly report stated that the company “has learned that the SEC is conducting a nonpublic, formal fact-finding investigation to determine whether there have been violations of certain provisions of the federal securities laws.” The potential violations mentioned in the report pertain to “the business manager fees, property management fees, transactions with affiliates, timing and amount of distributions paid to investors, determination of property impairments, and any decision regarding whether the company might become a self-administered REIT.”

As a public non-traded REIT, sales of Inland American may have carried a high commission which motivates brokers to make the recommendation to investors despite the investment’s unsuitability. The commission on a non-traded REIT is often as high as 15 percent. Non-traded REITs, such as Inland American, carry a relatively high dividend or high interest, making them attractive to investors. However, non-traded REITs are inherently risky and illiquid, which limits access of funds to investors, according to stock fraud lawyers.

Allegedly, Inland American may have been represented as a safe, low-risk investment. If it was, the product was misrepresented and clients may be able to recover losses through securities arbitration, according to lawyers in that sector. Furthermore, some brokers allegedly put a substantial amount of some clients’ assets in the REIT which resulted in an over-concentration that was unsuitable for investors.

Some of the non-traded REITs being investigated by the securities arbitration lawyers at CJ Gray are Inland American, KBS REIT, Cornerstone Healthcare REIT, Inland Western and Behringer Harvard REIT.

If you are an investor who suffered losses as a result of an unsuitable recommendation or over-concentration of stock in Inland American or any of the other REITs being investigated, you may have a valid securities arbitration claim. To find out more about your legal rights and options, contact a stock fraud lawyer at The Law Office of Christopher J. Gray at (866) 966-9598 for a no-cost, confidential consultation.

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