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Shepherd Smith Edwards and Kantas Investigates NEXT Financial Group Over Non-Traded REIT Sales

NEXT Financial Group Sold Unsuitable REITs To Investors, Including Older Seniors 

If you were an investor who suffered losses in Real Estate Investment Trusts (REITs) that were recommended and sold to you by a NEXT Financial Group broker, Shepherd Smith Edwards and Kantas (SSEK Law Firm) wants to talk to you. 

The Houston-based independent brokerage firm was recently fined $150K by the Massachusetts Securities Division for selling REITs to investors even when these investments were not suitable for them. 

The Massachusetts of the Secretary of the Commonwealth’s office opened its probe into NEXT Financial, which is owned by Atria Wealth Solutions, in 2017 after a retired veteran complained. He contends that after asking that his money be placed in conservative investments, the broker-dealer proceeded to invest his assets in non-traded REITs and annuities. The investor said that he never fully comprehended the risks involved in these types of investments. 

Non-traded REITs Are Illiquid Investments 

Non-traded real estate investment trusts are not recommended for investors older than 80 years old. They are also harder to sell than other kinds of investments and typically come with a 5 to 7 year hold period. Because they are illiquid investments, non-traded REITs should never comprise more than 20% of an investor’s liquid net worth. 

Yet, according to Secretary Galvin’s office, NEXT Financial Group sold non-traded REITs to investors that went beyond the firm’s own guidelines for how much a client’s liquid net worth should be concentrated in alternative investments. 

Also, of the 300 REIT sales made to over 160 Massachusetts clients during a 10-year period, 51 of the transactions exceeded the firm’s liquid net worth concentration guidelines. At least three of the customers affected were seniors older than 80. 

NEXT Financial Accused Of Failure To Supervise 

One broker, who has not been named, allegedly sold hundreds of REITs to investors in Massachusetts, with many of these transactions being unsuitable and not meeting NEXT Financial’s guidelines. 

It is the duty of broker-dealers and their registered representatives to make sure that they are making investment recommendations that are suitable for each customer and meet their investment goals and risk tolerance level. 

The Massachusetts Securities Division says that NEXT Financial failed to properly supervise its brokers who sold non-traded REITs to investors even when they were not appropriate for them and/or didn’t meet the firm’s guidelines. Inadequate supervision can be grounds for investor fraud claims when losses and/or other damages result. 

As part of the terms of the order Massachusetts, NEXT Financial Group must give customers who were affected by the non-traded REIT sales “written offers of rescission and/or restitution.” That said, there may be losses and/or other damages suffered as a result of the non-traded REIT transactions that were unsuitable and/or didn’t fulfill the broker’s own guidelines. Also, even when such orders are made by regulators, this doesn’t always mean that investors are guaranteed full financial recovery. 

Our Securities Fraud Lawyers Can Help

Our non-traded REIT, securities fraud lawyers at SSEK Law Firm work with investors throughout the United States in helping to get back such losses. Having your own legal representation can maximize your chances of recovery because you have an experienced team advocating on your behalf and protecting your rights. 

If you were sold non-traded REITs or other alternative investments that you suspect may be unsuitable for you by NEXT Financial Group and you’d like to explore your legal options, contact SSEK Law Firm today.

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