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Investors in Lightstone Value Plus REIT IV, Inc. (sometimes referred to below as “Lightstone IV””) may have FINRA arbitration claims, if their investment was recommended by a financial advisor who lacked a reasonable basis for the recommendation, or if the nature of the investment was misrepresented by the stockbroker or advisor.

Lightstone IV, formerly known as Lightstone Real Estate Income Trust, Inc., changed names on September 15, 2021.  Lightstone IV, a public, non-traded REIT, reportedly focuses on investing in debt obligations that finance development or redevelopment opportunities, originate mezzanine loans or preferred equity investments in development projects, and participates in loan portfolios with third parties.

According to data from secondary sales websites, shares of the REIT have been listed for sale at prices between $3.40 and $4.00 a share.  Shares were originally sold for $10 per share. According to filings on March 18, 2022, the board of directors approved an estimated value per share of $8.58 per share based on assets less the estimated value of liabilities divided by the number of shares outstanding.

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Investors in American Healthcare REIT Inc. (sometimes referred to below as “AHR”) may have FINRA arbitration claims, if their investment was recommended by a financial advisor who lacked a reasonable basis for the recommendation, or if the nature of the investment was misrepresented by the stockbroker or advisor.

Shares in the American Healthcare REIT were recently the subject of a mini tender offer to purchase Class T and Class I common sharers of the REIT for $8.50 per share, which equates to $2.13 a share after accounting for the November 2022 four-for-one reverse stock split in AHR shares.  AHR’s Board of Directors announced it was neutral concerning these  unsolicited offers.

Despite this neutrality, the tender offer is for a per share consideration far below AHR’s published estimated net asset value (NAV) per share of $31.40 as of December 31, 2022.

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Investors in The Necessity Retail REIT, Inc. (“Necessity REIT”), formerly known as American Finance Trust, Inc. (AFIN) and, before that, as American Realty Capital Trust V, Inc., may have FINRA arbitration claims, if their investment was recommended by a financial advisor who lacked a reasonable basis for the recommendation, or if the nature of the investment was misrepresented by the stockbroker or advisor.

Necessity REIT listed its shares on Nasdaq Global Select Market (“Nasdaq”) under the ticker symbol “AFIN” effective July 19, 2018.  The Company later changed its name to The Necessity Retail REIT and adopted the ticker symbol “RTL” in February 2022.   Before listing its shares on Nasdaq,  Necessity REIT (then known as American Finance Trust) published an “estimated per share” net asset value of $23.56 in June 2018- leaving investors surprised when the REIT’s shares plummeted in value after being listed on Nasdaq only a month later in July 2018.   The REIT’s shares have continued to languish, and as of January 2023, Necessity REIT shares were trading at below $7.00 a share- meaning that investors who bought shares in the initial offering would have lost well over half of their initial investment.

More recently, an investor in Necessity REIT known as Blackwells Capital, LLC (“Blackwells”) has called for corporate governance changes and new directors for the REIT.  According to a recent news article, Blackwells reportedly notes that Necessity REIT trades at a 68.5% discount to its net asset value or “NAV” which, according to Blackwells, represents poor performance relative to comparable REITs.  Blackwells reportedly filed a lawsuit against Necessity REIT in December, 2022, challenging Necessity REIT’s interpretation of the meaning of a July 2022 bylaw amendment concerning the appointment of directors to the REIT’s board.  Blackwells has nominated two candidates for the Necessity REIT’s board, who have been rejected by the REIT, precipitating the lawsuit.

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Investors in Woodbridge, either through a First Position Commercial Mortgage (commonly referred to as a “FPCM” or “note”) or in any Woodbridge “units” upon the recommendation of former broker David Ferdwerda (CRD# 832431) may be able to recover your losses through securities arbitration.  As recently disclosed by FINRA, as of October 30, 2018, FINRA barred registered representative David Carl Ferdwerda (“Ferdwerda”) from the securities industry due to his purported failure to provide requested documents and information to FINRA concerning his sales of Woodbridge securities.

According to publicly available FINRA records, from 2012 through March 2018, Mr. Ferdwerda was affiliated with broker-dealer Signator Investors, Inc. (BD No. 468) (“Signator”) in the firm’s Grand Rapids, MI office.  Further, FINRA BrokerCheck indicates that Mr. Ferdwerda was discharged from his employment with Signator on or about March 20, 2018 due to his alleged “Involvement in the sale of unapproved outside investments in violation of firm policy.”  Through his alleged nonresponsiveness to FINRA Enforcement’s investigation, Mr. Ferdwerda neither admitted nor denied FINRA’s findings.

As has been alleged by the SEC, Woodbridge and its owner and former CEO, Mr. Robert Shapiro, purportedly “used his web of more than 275 Limited Liability Companies to conduct a massive Ponzi scheme raising more than $1.22 billion from over 8,400 unsuspecting investors nationwide through fraudulent unregistered securities offerings.”  According to Steven Peiken, Co-Director of the SEC’s Enforcement Division, the Woodbridge “[b]usiness model was a sham.  The only way that Woodbridge was able to pay investors their dividends and interest payments was through the constant infusion of new investor money.”

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Investors with losses in Healthcare Trust, Inc. a non-traded real estate investment trust (Non-Traded REIT) may have arbitration claims if a broker or advisor made a recommendation to purchase the shares without a reasonable basis or misled the customer as to the nature of the investment.  Healthcare Trust is an investment trust which seeks to acquire a diversified portfolio of real estate properties focusing primarily on healthcare-related assets including medical office buildings, seniors housing, and other healthcare-related facilities.

According to secondary market providers that allow investors to bid and sell illiquid products such as Non-Traded REITs, shares in Healthcare Trust are selling for about $14.99 per share – which represents a significant principal loss compared with the offering price of $25.00.

Published on: June 30, 2017, the former CFO of American Capital Properties Inc. (“ARCP”), Brian Block, was found guilty of securities fraud and related crimes in connection with reporting false numbers in quarterly filings with the Securities and Exchange Commission (“SEC”).  The verdict was handed down following a nearly three-week trial held in the U.S. District Court for the Southern District of New York.  A jury returned the verdict less than a day after closing arguments.  Mr. Block was convicted of one count of securities fraud, two counts of filing false reports with the SEC, two counts of filing false certifications, and one count of conspiracy.

In 2014, ARCP was set to file its financial statement for the second quarter, when an employee informed Block and Chief Accounting Officer Lisa McAlister that there was a methodological error in some of the firm’s calculations and that its average funds from operations (or AFFO, a key financial metric for real estate investment trusts) was overstated by roughly $0.03 per share.  Despite this guidance, no corrective action was taken to address the issue of overstated AFFO.  On October 29, 2014, ARCP shares plunged as much as 37% — effectively wiping out roughly $4 billion in market value — after the company publicly stated that certain of its employees had concealed accounting errors.

Following the $23 million accounting scandal, ARCP, a non-traded REIT sponsor, changed its name to VEREIT (from the Latin word “veritas” for truth).

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Investors in VGTel, Inc. (“VGTel”) (OTC PINK: VGTL) may be able to recover their losses through initiating a securities arbitration proceeding with the Financial Industry Regulatory Authority (“FINRA”) if they were sold VGTel shares via misrepresentations or if a stockbroker or financial advisor made an unsuitable recommendation to purchase VGTel shares.
VGTel has been the subject of a recent SEC Complaint in the Southern District of New York (as of January 2016).  Specifically, the SEC has alleged that, from 2012-2014, Mr. Edward Durante defrauded at least fifty unsophisticated investors in New England, Ohio and California of at least $11 million through the sale of VGTel securities.  The Complaint alleges that Durante essentially controlled VGTel (which was little more than a shell company), and in furtherance of a fraudulent scheme, sold approximately six million shares of VGTel stock using several false names, including ‘Efran Eisenberg’ and ‘Ted Wise.’  Further, the SEC Complaint alleges that Mr. Durante bribed certain financial advisors in order to encourage these brokers to steer their clients into purchasing VGTel stock.

FINRA rules mandate that member firms implement and act upon reasonable safeguards and compliance programs designed to ensure proper supervision of a broker’s activities during the time a broker is associated with that particular brokerage firm.  Accordingly, a brokerage firm that fails to properly supervise its registered representatives may well be liable for investment losses sustained due to the malfeasance or misconduct of certain brokers.

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Stockbroker arbitration lawyers are looking into accusations made against First Allied Securities, Inc. and broker Rami Yahalom regarding risky investments in AE Luxtera Investments II, LLC, a private technology start-up company. According to reports of a FINRA arbitration claim filed by investors, First Allied and Yahalom offered Luxtera to customers without disclosing sufficient information regarding the investment.  

Allegations Made Against First Allied Regarding Private Equities

According to the allegations, Luxtera was represented as a late stage equity, which means that it was due for an initial public offering (IPO) within 12-36 months. Additionally, the complaints report that First Allied indicated expected revenues in excess of $300 million, when in reality the company had not achieved sales above $1 million.

This is not the first time stockbroker arbitration lawyers have received complaints regarding First Allied and private equity investments.  If you suffered significant losses as a result of doing business with Rami Yahalom or First Allied, or received an unsuitable recommendation of advanced private equities from another stockbroker or financial advisor, you may be able to recover your losses through securities arbitration. To find out more about your legal rights and options, contact a stock fraud lawyer at the Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or for a no-cost, confidential consultation.

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