Massachusetts securities regulators have hit Ameriprise Financial Services, Inc. with $1.6 million in restitution to clients as well as fines over sales of non-traded real estate investment trusts (REITs). The restitution and fines stem from non-traded REITs sales from 2005 to present. Massachusetts' investigation showed problems related to the firm's own policies as well as the state rule that an investor's purchase of REITs cannot be more than 10% of an investor's liquid net worth. Chris Reese, a spokesman for Ameriprise Financial Services, Inc., declined to comment. An excessive concentration of REITs can be a violation of FINRA's suitability rule. After the investigation of broker-dealer sales practices involving REITs, the Massachusetts Securities Division launched a broader inquiry into the sales of alternative investments to seniors.
REITs invest in a diversified set of income producing real estate properties and mortgages, and they must distribute 90 percent of net earnings to investors. REITs allow investors to partake in real estate investing without directly owning property, which may lock up large amounts of money for long periods of time. The most popular REITs are publicly traded on a stock exchange such as the New York Stock Exchange (NYSE) - they are relatively transparent in their finances and operations and are covered extensively by investment analysts. Non-traded REITs are not listed or registered with securities regulators and are supposed to be available only to accredited investors - $1 million or more in assets or $200,000.00 in annual income. Non-traded REITs disclose their finances publicly and offer shares to the public, but they do not list their shares on an exchange, which is one of many risk factors associated with them.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. Please see our Instablog profile (left column) for ways to contact us and get answers to any of your questions about this blog post and/or any related matter.