On May 22, 2013, secretary of the Commonwealth of Massachusetts William Galvin announced settlements with five major independent broker-dealers. According to the settlements, Ameriprise Financial Services Inc. will pay $2.6 million in restitution to investors and a $400,000 fine, Commonwealth Financial Network will pay restitution of $2.1 million and a fine of $300,000, Royal Alliance Associates Inc. will pay restitution of $59,000 and a fine of $25,000, Securities America Inc. will pay restitution of $778,000 and a fine of $150,000 and Lincoln Financial Advisors Corp. will pay restitution of $504,000 and a fine of $100,000. Securities fraud attorneys are currently investigating claims on behalf of investors who purchased Real Estate Investment Trusts (REITs) from these or any other independent broker-dealers.
According to a statement made by Mr. Galvin, “Our investigation into the sales of REITs, triggered by investor complaints, showed a pattern of impropriety on the sales of these popular but risky investments on the part of independent brokerage firms where supervision has historically been difficult to monitor.”
According to stock fraud lawyers, this settlement follows the February decision in which LPL Financial LLC was required to pay restitution to investors of $2 million and fines totaling $500,000 regarding non-traded REIT sales.
Some non-traded REITs may have carried a high commission which motivated brokers to recommend the product to investors, despite the investment’s unsuitability. The commission on a non-traded REIT is sometimes as high as 15 percent. Many non-traded REITs carry a relatively high distributions, making them attractive to investors. However, non-traded REITs are not traded on any national securities exchange, which limits access of funds to investors. 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, and those recommendations must be suitable for the individual investor receiving the recommendation given their age, investment objectives and risk tolerance.
If you received an unsuitable recommendation of a non-traded REIT and/or were not made aware of the risks associated with these investments, you may have a valid securities arbitration claim. To find out more about your legal rights and options, contact a stock fraud lawyer at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 for a no-cost, confidential consultation.