Stockbroker Fraud: FINRA Warnings on Non-Trade REITs (Part 4)

Stockbroker Fraud, Non-Trade REITs and Extra Risks

Last time, we talked about an abundance of hidden fees on non-trade REITs making it easy to commit stockbroker fraud and, at least, eating up your dividends and principal. Today I’d like to finish with a couple more high-risk factors involved with non-trade REITs. Look out for:

• Investment properties not being specified. Many non-trade REITs start out as blind pools, where no exact property is specified for purchase. Others may mention only part of the properties the REIT plans to purchase or may mention properties in different stages of acquisition which have not yet been acquired. This takes away your ability to assess the assets of the REIT before you invest. When you cannot research an REIT’s assets, you are going on blind trust in a broker or a firm, making you a ripe target for stockbroker fraud. Always ask what percentage of your non-trade REIT’s properties have been specified and what percentage has been fully acquired.
• Diversification can be more limited than you think. As a class, REITs can help you diversify your portfolio, however, investing in only one REIT, even if it’s in different phases of the same REIT, is just putting all of your eggs back into one single higher risk basket.
• There are individual risks for each different type of property. Understand the risks of the specific type of real estate your REIT holds and how it leverages to acquire assets. Make sure you carefully discuss specific risks with your broker and carefully study the prospectus.

The Best Help with Stockbroker Fraud

If you are not getting anywhere with resolving your investment disputes, believe you are the victim of stockbroker fraud or just need help discussing your options with the securities arbitration process, call S. David Anton of Anton Legal Group!

[1] http://www.finra.org/Investors/ProtectYourself/InvestorAlerts/REITS/P124232