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LPL Financial Sued By Massachusetts Securities Division For REIT Sales

On December 12, 2012, William Galvin, the head securities regulator for Massachusetts charged LPL Financial, LLC of San Diego with a failure to supervise brokers who sold non-exchange traded real estate investment trusts (REITs) in violation of state limitations and company rules. Massachusetts also charged LPL with dishonest and unethical business practices.

The Massachusetts charges are the result of the sale of nontraded REITs during 2006 to 2009. Of some 600 sales examined, the Securities Division found that 569 had regulatory violations including violations of concentration limits, sales made in violation of prospectus requirements and sales in violation of LPL compliance rules. With more than 13,000 brokers nationwide, LPL is one of the largest sellers of non-traded REITs.

Here is a link to the 34 page complaint on the Massachusetts Securities Division website.
They are focusing on seven non-traded REITs sold by LPL:

  • Inland American
  • Cole Credit Property Trust II
  • Cole Credit Property Trust III
  • Cole Credit Property 1031 Exchange
  • Wells REIT II
  • W.P. Carey Corporate Property Assoc. 17
  • Dividend Capital Total Realty

Other popular non traded REITs sold by broker dealers that have not fared well include:

  • KBS
  • Behringer Harvard
  • Hines
  • Retail Properties of America
  • CNL Lifestyle Properties

Non-exchange traded REITs are not traded on any conventional exchange making liquidation when cash is needed, very difficult. Many of the REITs are down 40-50% or more in value since when they were purchased. FINRA has been concerned about these investments for some time as we previously have written.

In prior blog postings we have addressed the fact that many retirees were sold these REITs with the promise of steady, dependable distributions of income and with the belief that the value would remain constant or increase. Most did not understand that due to the fact they are not traded, there essentially is little or no market if the investor wishes to liquidate.

If you purchased nontraded REITs based upon misrepresentations you may be able to recover some or all of your losses.

Robert H. Rex, Esq. been helping investors recover investment losses for over twenty years. We represent clients nationwide. Contact us for a no cost consultation.

Rex Securities Law

561 391 1900

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.