Securities fraud attorneys are continuing to file claims on behalf of investors who suffered losses as a result of their investments with Inland Western REIT. Inland Western, which is now known as Retail Properties of America Inc., is the third-largest shopping center REIT in the nation.
Inland Western’s recent IPO offering resulted in some disastrous effects on investors. Recent reports indicate that Inland Western’s $8 offering price was the result of reverse-stock-split engineering. This price is significantly less than the expected pre-offering price, which was $10 to $12. In actuality, investors who paid $10 per share for the REIT originally are receiving a split-adjusted value of only $3 per share. This 70 percent decline could result in staggering losses. However, it may be possible for investors to recover their losses through FINRA securities arbitration.
Inland Western is a non-traded Real Estate Investment Trust (REIT). According to stock fraud lawyers, REITs typically carry a high commission which motivates some brokers to make the recommendation to their clients despite the investment’s unsuitability. The commission on a non-traded REIT is often as high as 15 percent. Non-traded REITs, like Inland Western, 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.
Recently there have been many non-traded REITs under investigation. Some of the non-traded REITs being investigated by the securities fraud attorneys at CJ Gray are Inland Western, Inland American, KBS REIT, Cornerstone Healthcare REIT and Behringer Harvard REIT.
Generally, a problem with these investments arises when a financial advisor fails to adequately disclose, to the customer, the risks and illiquidity of the investment. Valuation problems of these investments are another major issue. Currently, FINRA rules only mandate that the sponsors of the investments establish an estimated per-share valuation no longer than 18 months after the investment stops raising investor funds. However, fund raising can, and often does, last for years. As a result, the per-share valuation can go for years without being updated. For more information, see the previous blog post, “The Problem with Non-traded REITs.”
If you suffered losses as a result of your investment in the Retail Properties of America Inc. REIT, 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.