LPL Financial Suspends Interval Funds And Nontraded REITs

LPL Blocks Sales of Nontraded Real Estate Investment Trusts and Publicly Traded Property Interval Funds

This week, LPL Financial (LPLA) announced that it had suspended its sales of several nontraded REITs, as well as a number of publicly traded property interval funds. This is because the novel coronavirus (COVID-19) was placing these investments at a higher risk of losses.

In an email to InvestmentNews, LPL EVP of Products and Platforms, Rob Pettman, wouldn’t offer the names of the funds but did note that the broker-dealer hoped to offer them to investors again once the markets had calmed.

Our investment fraud lawyers at Shepherd Smith Edwards and Kantas (SSEK Law Firm) are offering free, initial case consultations to LPL Financial customers who invested in nontraded REITs or publicly traded property intervals and have since suffered substantial losses. We work with investors throughout the United States.

What Are Interval Funds?

This is a closed-fund and its shares don’t trade on the secondary markets. Instead, these funds offer to pay back a percentage of outstanding shares at net asset value. Interval funds, like the publicly traded property funds offered by LPL Financial, are very illiquid and offer high risks if managed incorrectly. Like REITs, they are not for every type of investor.

List of Publicly Traded REITS and Nontraded REITs that May Be Impacted by the LPL Suspensions:

Below, is a list of the publicly traded REITs and nontraded REITs that could potentially be impacted by these suspensions by LPL.

Black Creek Industrial REIT
Griffin Institutional Access Real Estate Fund
Blackstone REIT
Starwood REIT
Jones Lang Lasalle Income Property Trust
Bluerock Total Income + Real Estate Fund
CIM Income NAV REIT
RREEF Property Trust
Hines Global Income Trust
Resource Real Estate Diversified Income Fund
Nuveen Global Cities REIT

Investors Losses May Be Due to Broker Fraud Even During COVID-19

Yes, COVID-19 is ravaging the economy and causing major volatility in the markets, and this is resulting in investor losses. However, not all of these are because of the pandemic.

There are investors who may be losing even more money because a broker made an unsuitable investment recommendation, didn’t apprise of the risks involved, or promoted the investment because it would pay higher commissions rather than because it was in the customer’s best interests.

Brokers, along with the brokerage firms that failed to properly supervise these registered representatives, can be held accountable through a Financial Industry Regulatory Authority (FINRA) arbitration claim.

LPL REIT Fraud Claims: Timeline

In recent years especially, LPL Financial has come under fire from customers and regulators for what they considered the inappropriate sales of REITs. New Hampshire, Massachusetts, and New Jersey are among the states whose securities regulators have collectively fined LPL millions of dollars over this alleged misconduct by its brokers.

And in 2018, even SII, a brokerage firm that it acquired, was fined $50K by FINRA and ordered to pay $4.6M in restitution to nontraded REIT customers.

REIT Fraud Law Firm

Even with COVID 19 continuing to wreak havoc, our REIT and interval funds fraud attorneys remain hard at work preparing investor claims to help our clients recover their losses. SSEK Law Firm has implemented all the necessary social distancing and safety and health measures to protect our clients and employees, including video and conference calls.

As always, we are here to protect investors throughout the US and fight for the compensation they are owed. Contact us today.