In May 2012, a class action complaint was filed against KBS Real Estate Investment Trust, Inc (KBS REIT I) and related companies and executives. The suit alleges what we have heard from many of our clients...that KBS made misrepresentations about the investment objectives, the reliability of the purported dividend payments and the value of the REIT's investments.
Investors paid $10 per share for KBS. The company announced an "estimated value" of $5.16 per share in March 2012, however as we have previously noted, the secondary market, which is the only place this investment can be traded, discounts the company's "estimated value" by another 20-30%. So investors may be surprised to learn that their shares are only worth $3-$4 if they need to liquidate quickly.
Given the rise in litigation over non-exchange traded REITs like KBS I, broker-dealers are becoming more wary of selling these products. The Investment News recently reported that Summit Brokerage Services, Inc. had suspended its selling agreements with KBS.
Investors who purchased KBS in 2006 should be aware that time may be running out for filing claims. See our prior discussion on that topic here.
Brokers owe a duty to investors to perform due diligence on the investments they offer to their customers. They also owe a duty to accurately and fully disclose the risks and rewards associated with each investment they sell. If you were misled about the nature of KBS REIT or any other investment and have suffered losses, you may be able to recover those losses.
Contact us at 561 391 1900 for a free consultation. Nationwide representation.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.