Stockbroker Fraud: FINRA’s warning on Non-Traded REITs
There’s been a rocky road and loss of faith in the stock market for a while now. With interest rates at an all time low, investors are looking for a better return on their investment. One of those higher yield investments is the real estate investment trust (REIT). There are two types of REIT, the publicly registered exchange traded REIT and the publicly registered non-traded REIT. While investing in a non-exchange REIT does not guarantee you will end up the victim of investment fraud, there is a lot of room for stockbroker fraud to occur.
There are several differences between non-traded and exchange REITs that make an enormous difference to investors and their assumed risk. Below is a list of the differences that can leave you open to stockbroker fraud.
- Shares of non-traded REITs do not trade on a national securities exchange and therefore are not liquid, often for periods of up to eight years or more. Many brokers are simply not forthcoming about that risk.
- Early redemption of shares is usually very limited, with enormously high fees for their sale that destroy your total return.
- Seemingly attractive periodic distributions may be based on borrowed funds or a return of the investor’s principal, hiding an actual loss of value. Dividends from REITs traded on national exchanges are usually derived solely from earnings, so it’s much harder for a broker or firm to hide a loss of market value.
In this on-going series, we’ll take a more in depth look at REITs, stockbroker fraud and why FINRA is so concerned for your investment safety. If you are not getting anywhere with resolving your investment disputes and need help to discuss your options with the securities arbitration process, call S. David Anton of Anton Legal Group!
S. David Anton, Esquire is a Certified Arbitrator for the Financial Industry Regulatory Authority (FINRA), formerly the NASD, which is the national organization responsible for overseeing the securities industry. He has served as a Judge/Panelist and rendered decisions in many securities arbitration, giving him a unique perspective on his client’s cases.
FOR SECURITIES ADVICE, PLEASE FEEL FREE TO CONTACT DAVID ANTON OF THE ANTON LEGAL GROUP AT (813) 443-5249