According to investment fraud lawyers, investors who sustained significant losses because of their investment in Cornerstone Core Properties REIT may be able to recover losses through Financial Industry Regulatory Authority (FINRA) arbitration. Full-service brokerage firms who sold Cornerstone are now being investigated. Pacific Cornerstone Capital Inc., the sponsor of the Cornerstone REIT, is only one of the firms included in this investigation by securities arbitration lawyers.
Investors in the Cornerstone REIT received a letter in March which stated that the share price of their investment had suffered a 72 percent decline, dropping from $8.00 to $2.25. As a result of this decline, significant damages have been suffered by the investors of Cornerstone REIT.
Investment fraud lawyers have stated that as an illiquid, non-traded investment, Cornerstone REIT was not a suitable investment for all investors. FINRA 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. Furthermore, brokerage firms must, before approving an investment’s sale to a customer, conduct a reasonable investigation of the securities and issuer.
On October 4, FINRA released an Investor Alert entitled, “Public Non-Traded REITs — Perform a Careful Review Before Investing.” According to FINRA, “While investors may find non-traded REITs appealing due to the potential opportunity for capital appreciation and the allure of a robust distribution, investors should also realize that the periodic distributions that help make non-traded REITs so appealing can, in some cases, be heavily subsidized by borrowed funds and include a return of investor principal.” Furthermore, according to FINRA, non-traded REITs usually carry a very limited redemption of shares, as well as high fees and an eroded total return. For more on FINRA’s Investor Alert, see the previous blog post, “FINRA Investor Alert: Public Non-Traded REITs.”
If you have money locked up in Cornerstone Core Properties REIT, or have suffered significant financial losses as a result of your investment in Cornerstone REIT, you may have a valid securities arbitration claim. To find out more about your legal rights and options by contacting a securities arbitration lawyer at The Law Office of Christopher J. Gray at (866) 966-9598 for a no-cost, confidential consultation.