The Financial Regulator for the Commonwealth of Massachusetts recently announced a settlement with five brokerage firms–Ameriprise Financial Services, Commonwealth Financial Services, Lincoln Financial Advisors, Securities America and Royal Alliance Associates–over the unsuitable sale of a particularly risky real estate investment trust referred to as a “non-traded REIT” due to the fact that this type of REIT has limited liquidity and cannot be freely sold on the open market. See related blog post: Investors Beware: Non-Listed REITs
- Inland Real Estate Trust, Inc.
- Inland Western Real Estate Trust, Inc.
- Inland American Real Estate Trust, Inc.
- Inland Diversified Real Estate Trust, Inc.
Massachusetts imposes more stringent requirements on the sale of non-traded REITs to its residents and prohibits any investment exceeding 10% of the individual’s liquid net worth. In addition to giving restitution to Massachusetts investors, the firms were required to pay administrative fines ranging from $400,000 to $25,000. According to the Secretary of the Commonwealth of Massachusetts, over $11 million will be returned to Massachusetts investors.
Disclosure: The Alcala Law Firm routinely represents clients who have pursued claims against their financial advisors for losses associated with non-traded REITS.