What To Do If You Suffered Investor Losses in Private REITs?

Filing a FINRA Lawsuit May Help Investors Recoup Private REIT Losses

Texas Investor Alleges Unsuitability and Other Broker Misconduct Against Calton and Associates

Once again, Shepherd Smith Edwards and Kantas (investorlawyers.com) have filed a Financial Industry Regulatory Authority (FINRA) arbitration claim on behalf of an investor who has suffered losses in Private REITs. The claimant is a Texas resident nearing retirement.

This older investor, who has ongoing medical issues, entrusted broker-dealer Calton & Associates to keep his retirement savings safe. Instead, his financial advisor allegedly unsuitably recommended a number of unsuitable privately traded REITs, including:

• American Finance Trust (now The Necessary Retail REIT)
• New York City REIT
• Benefit Street Partner Realty Trust(later called Franklin BSP Realty Trust)

All of these investments are very high-risk and illiquid. They are not appropriate for the IRA of a conservative investor about to retire. Meanwhile, his broker-dealer, which was IMS Securities at the time, allegedly never apprised the customer of the risks.

After being expelled from the securities industry in 2018, IMS Securities was acquired by Calton. This means that the latter inherited this investor’s portfolio and had a fiduciary duty to maintain his IRA account. Unfortunately, it doesn’t appear that anyone from Calton, including his new broker, ever made meaningful contact with him.

In his FINRA lawsuit against Calton, this senior investor is requesting up to $500K in damages for his investment losses. He also is alleging negligence, breach of fiduciary duty, unsuitability, misrepresentations and omissions, and other claims.

This is not the only FINRA arbitration claim that our brokerage firm negligence attorneys have filed against Calton for unsuitably investing customers in investments that were too high-risk for them.

What Are Private REITs?

These real estate investment trusts cannot be found on any major exchange. Their value is determined by an appraisal of assets. While they are subject to Regulation D requirements, they are not regulated by the US Securities and Exchange Commission (SEC). Private REITs should only be sold to accredited investors and institutional investors. They are not suitable for most conservative investors, retirees, senior investors, and retail customers.

Private REITs, which require high investment minimums, can offer dividend yields of around 7-8%. They are not subject to market fluctuations. However, there are high risks involved, including the fact that they tend to be illiquid and lack transparency. Not very much information is available about these types of private placement investments, which can make it hard to gauge performance. Not only that but also brokers will often charge customers high commissions for investing in private REITs. Some financial advisors have been known to receive up to 12% in marketing fees and commissions.

What Should You Do If You Suffered Investor Losses in Private REITs?

It is important that you explore your legal options with the help of skilled REIT investor loss attorneys right away. Although not all investment losses are due to broker misconduct or negligence, you may be able to pursue damages from your broker-dealer if they:

• Unsuitably invested you in a privately-traded REIT.
• Made misrepresentations and omissions about the risks.
• Overconcentrated your portfolio with too many real estate investment trusts.
• Generally did a bad job of managing your brokerage account.

Unfortunately, the high commissions and fees that they can earn from selling REITs can cause some financial advisors to lose sight of their priority, which should be to look out for clients’ best interests. This is why many investors end up unsuitably involved in private REITs.

Brokerage firms have a duty to properly supervise their registered representatives and clients’ accounts to make sure that unnecessary losses are prevented.

How Can Our FINRA Lawyers Help You?

For over 30 years, Shepherd Smith Edwards and Kantas have been helping investors recoup their losses caused by brokerage firm negligence or fraud. We can help you explore your legal options during your free, no-obligation initial case consultation.

Should we determine that you have grounds for a FINRA lawsuit and we agree to work together, our REIT investor loss attorneys will conduct a thorough investigation so that we can build a solid investor fraud claim on your behalf. After filing your securities arbitration case we will represent you before the panel of FINRA arbitrators.

Determining, let alone proving, that broker-dealer negligence was a factor can be tough, which is why you need seasoned FINRA lawyers representing you. The ruling by the arbitration panel will be final and you will not be able to appeal.

It has been proven that retaining the services of a savvy securities fraud law firm can only maximize your chances of recovery. At Shepherd Smith Edwards and Kantas, over 90% of our clients have recovered either all or some of their losses. You will only pay us legal fees if we win an award or negotiate a settlement for you, and this money will never come directly out of your own pocket.

Call (800) 259-9010 today or contact us online.