REIT Fraud

Attorneys are investigating possible REIT fraud claims concerning real estate investment trusts (REITs). In some cases, broker-dealers or financial advisors may be recommending investments that are unsuitable or that come with high fees or their own commission structures to generate commissions for the advisor or broker. REIT arbitrations may be filed for the investor, if the REIT was an unsuitable investment or came with unreasonable fees or commissions.

Real Estate Investments Trusts (REITs) are investments in which the investor purchases shares in a portfolio of income-producing real estate properties. Some REITs are traded on exchanges, making them liquid. Non-exchange traded REITs (or non-traded REITs), however, are not traded publicly and are less liquid than typical REITs. REITs may also have high fees, which can go even higher if the investor attempts to redeem the shares early.

Some investors say they were sold non-exchange traded REITs as safe, liquid investments and that they were not informed of the risks associated with the non-exchange traded REIT. They say the non-exchange traded REIT was an unsuitable investment for them, given their financial circumstances, goals or risk tolerance.

Investors also say they were not told about the difficulty in reselling non-traded REITs, meaning if they need to access their funds, they may have limited options.

Other investors say that the non-traded REITs had huge fees or commissions, so they were advised to put their money in an expensive REIT to generate commission for their broker-dealer or financial advisor. In some cases, fees can run as high as 15 percent of the per share price, including selling compensation, expenses, additional offering and organizational costs.

The Financial Industry Regulatory Authority (FINRA) has taken action against broker-dealers who mislead investors into purchasing REITs. This included a 2013 finding against LPL Financial, who agreed to pay $2 million in restitution and an additional $500,000 in fines, regarding the sale of nontraded REITs. In 2012, David Lerner and Associates reportedly paid $12 million to its customers after allegations of deceptive marketing.

Investors who believe they were misled into investing in non-traded REITs or who were advised to purchase non-traded REITs even though it was unsuitable for them, may be able to file a FINRA arbitration against their broker-dealer.

REIT Fraud Legal Help

If you or a loved one has suffered similar REIT Fraud damages, please click the link below and your complaint will be sent to a Securities lawyer who may evaluate your claim at no cost or obligation.
Last updated on Oct-16-14