COVID-19 UPDATE: We're Open and Ready to Serve Our ClientsLearn More Here

Articles Tagged with Nontraded REIT

Did Brokers Recommend This Unregistered Security Because of High Commissions?

Investors who backed Moody National REIT II, a nontraded real estate investment trust, are now grappling with losses sustained after this investment significantly plunged in value and the company’s public offering and distribution payments were suspended. 

Nontraded REITs, which are very high risk, are not for every investor, and yet the 7% commission the REIT paid stockbrokers may have been incentive enough to recommend them to customers even when they weren’t in the latter’s best interests.

In Delaware Chancery Court, investors have brought a nontraded real estate investment fraud lawsuit against former RCS Capital (RCAP) CEO Nicholas Schorsch accusing him and his partners of enriching themselves by taking revenue from the publicly traded brokerage holding company. The plaintiffs are part of the RCS Creditor Trust. They are unsecured creditors who say they lost all of their investments with RCAP.

It was just last year that RCAP filed for bankruptcy after falling into millions of dollars in debt. It emerged as Aretec, the holding company that controls Cetera Financial Group.

The plaintiffs contend that Schorsch and partners Peter Budko, William Kahane, Brian Block, and Edward “Michael” Well took advantage of their authority at RCAP to enrich AR Capital, which was the nontraded REIT business that they wholly owned.

Continue Reading ›

Contact Information