According to the claim, the woman was sold non-traded REITs and other alternative investments by Jonathan Pyne, a broker for Berthel Fisher. The claim argues that her age and low risk tolerance made the investments unsuitable for her. The investments included:

• Inland American Real Estate Trust
• Wells REIT
• Cornerstone Core Properties REIT
• Gulf Coast Rig & Equipment
• REEF Oil & Gas Income and Development
• Leaf Equipment Leasing Income Fund III

Securities arbitration lawyers say that these investments are illiquid and, in many cases, may have been negligently misrepresented. In this woman’s case and possibly many others, the investments also allegedly represented a concentration level of her liquid net worth that was too large to be suitable.

Firms have an obligation to properly supervise their brokers and 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.

Non-traded REITs are attractive to investors because they carry a relatively high dividend or interest. According to investment fraud lawyers, however, these investments are inherently risky and illiquid, which limits access of funds to investors and makes them unsuitable for many individuals with conservative risk tolerances and those who need easy access to funds, especially when over-concentrated. Leveraged and inverse ETFs are designed to meet daily objectives, and “reset” each day. As a result, the performance of these investments can diverge from the performance of the underlying benchmark or index very quickly, and the problem is exasperated in volatile markets, making these investments unsuitable for many investors as well.

If you were sold unsuitable alternative investments from a Berthel Fisher broker, including non-traded REITs, inverse and leveraged ETFs and/or Oil & Gas Partnerships, you may be able to recover your losses through a 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.

Investment fraud lawyers note that independent broker-dealers have a responsibility to perform adequate due diligence when selling any investment, especially complex, illiquid products. Since the 2008 market collapse, FINRA has been aggressive with broker-dealers who failed to do so. Axelrod stated to the Securities Industry and Financial Markets Association’s Complex Products Forum that, “FINRA examiners have noted that in the instances of REITs that have experienced financial difficulties, red flags existed and should have been considered by firms prior to the product being offered to firm clients.”

Another problem with non-traded REITs, according to Axelrod, is that “non-traded REITs may also borrow funds to make distributions if operating cash flow is insufficient, and excessive borrowing may increase the risk of default or devaluation. In addition, non-traded-REIT distributions may actually be a return on principal.”

Some of the non-traded REITs currently being investigated by the stock fraud lawyers at Christopher J. Gray are Inland Western, Inland American, KBS REIT, Cornerstone Healthcare REIT, Behringer Harvard REIT, Paladin Realty Income Properties REIT, Wells REIT, Apple REIT, Desert Capital REIT, TNP Strategic Retail Trust, Dividend Capital REIT, Whitestone REIT, ArciTerra National REIT and CNL Lifestyle Properties REIT.

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