Another claim was filed recently against one broker registered with VSR Financial Services, Dennis Van Patter. This particular claim is regarding the following alternative investments:

• Inland American Real Estate Trust
• Cole Credit Property Trust II
• KBS Real Estate Investment Trust Inc.
• Cypress Equipment Fund 15
• CNL Lifestyle Fund
• Boston Capital Series 44
• Boston Capital Series 47
• United Development Funding III
• MPF Income Fund 25
• Penneco Oil Company 2008-1
• Atlas Energy Public 17-2008B
• Atlas Energy Public 17-2009B

According to securities arbitration lawyers, these investments were unsuitable for the claimant and may have been unsuitable for other VSR customers. The claim, filed on behalf of a Texas widow, is attempting to recover damages of more than $475,000. According to the claim, the widow received around $750,000 in insurance proceeds after the death of her husband. She then opened an account with Van Patter at VSR Financial.

The claim alleges unsuitability and negligent misrepresentation on the part of Van Patter as well as breach of fiduciary duty and negligent supervision on the part of VSR Financial. Under FINRA rules, 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. Furthermore, lawyers say firms have an obligation to properly supervise brokers’ activities while they are registered with the firm.

In addition, VSR Financial was sanctioned and fined, while its CEO and co-founder, Donald Beary, was suspended and fined in May 2013 for failure to adequately supervise non-conventional investment sales to investors.

If you are a VSR Financial Services customer who suffered significant losses as a result of the unsuitable recommendation of alternative investments, you may have a valid securities arbitration claim. To find out more about your legal rights and options, contact a securities arbitration lawyer at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or newcases@investorlawyers.net for a no-cost, confidential consultation.

In recent events, other non-traded REITs have gone through this process and securities fraud attorneys say that, in most cases, the event does not go well for investors. As a result of the exit event, many REITs have experienced a significant decline in the offering — often amounting to 30 percent or more of the investment’s value.

As the seventh-largest non-traded REIT in the industry, Cole Credit Property Trust II has invested assets amounting to nearly $3.4 billion. Reportedly, Morgan Stanley and UBS Investment Bank have been hired by Cole Credit Property Trust II to explore their options for the exit event. Investment fraud lawyers encourage Cole Credit Property Trust II investors to closely monitor the REIT’s valuation as, despite an estimated valuation of $9.35 per share, the trend in previous non-traded REITs indicates that the market may not be so kind to the per share valuation.

In many cases, broker-dealers may have failed to adequately perform due diligence on non-traded REITs prior to recommending them for sale to their customers. Furthermore, many brokerage firms may have failed to adequately consider clients’ age, net worth, investment experience and risk tolerance before determining an investment’s suitability for each client. REITs typically carry 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 Cole Credit Property Trust II, carry a relatively high dividend or high interest, making them attractive to investors. However, these investments are inherently risky and illiquid, which limits access of funds to investors.

If you suffered significant losses as a result of your investment in a non-traded REIT, you may have a valid securities arbitration claim. To find out more about your legal rights and options, contact a securities fraud attorney at The Law Office of Christopher J. Gray at (866) 966-9598 for a no-cost, confidential consultation.