REIT Category Archives — Page 2 of 5 — Investor Lawyers Blog Published by New York, New York Investor Attorneys

Published on: December 5, 2013

Unsuitable Recommendation of Non-traded REITs and Other Unsuitable Investment Products

Securities fraud attorneys are currently investigating claims on behalf of investors who suffered significant losses as a result of the unsuitable recommendation of risky non-traded REITs and other products by their broker or financial advisor. Last month, another arbitration claim was filed with the Financial Industry Regulatory Authority regarding such risky products.

Unsuitable Recommendation of Non-traded REITs and Other Unsuitable Investment Products

According to the claim, Paul Larsen, a financial advisor, liquidated the claimants’ mutual funds, blue chip stocks and fixed income investments. Allegedly, he told his clients he was doing this to get away from the market risk of these investments. Furthermore, he represented the replacement investments as safe and claimed they would generate income and were opportunities he offered to his “best clients.” However, the products he invested his clients’ funds in were risky, unsuitable investments including:

KBS REIT

Published on: November 21, 2013

Alleged Unsuitable Recommendations of Non-Traded REITs by Surevest, Others

by InvestorLawyers

Investment fraud lawyers are currently investigating claims on behalf of investors who suffered significant losses as a result of doing business with Surevest Capital Management and employees of the firm.

Alleged Unsuitable Recommendations of Non-Traded REITs by Surevest Others

Allegedly, Surevest invested some of its clients in high-risk portfolios, allocating very little of these accounts into traditionally low-risk investments. These high-risk investments allegedly included equities, non-traded REITs and other private placement securities. Some Surevest clients have raised allegations asserting that the high-risk investment recommendations were unsuitable and implemented regardless of the age, risk tolerance and other considerations of the investors.

According to securities arbitration lawyers, firms have an obligation to fully disclose all the risks of a given investment when making recommendations, and those recommendations must be suitable for the individual investor receiving the recommendation given their age, investment objectives, and risk tolerance. Non-traded REITs are inherently risky and illiquid, which limits access of funds to investors and makes them unsuitable for many individuals with conservative risk tolerances as well as those who need easy access to funds. Other private placements and equities also carry significant risks.

Published on: September 17, 2013

Unsuitable Recommendations of Behringer Harvard Multifamily REIT I May Give Rise to FINRA Arbitration Claims

by InvestorLawyers

Investors who suffered significant losses as a result of the unsuitable recommendation of Behringer Harvard Multifamily REIT I from a full-service brokerage firm can contact a securities fraud attorney to determine if they wish to pursue legal claims through Financial Industry Regulatory Authority (FINRA) arbitration.

An announcement from Behringer Harvard Holdings LLC stated that affiliates of Behringer Harvard and a board of directors special committee of Behringer Harvard Multifamily REIT I had entered into contractual arrangements, initiating the process of making the REIT self-managed. However, the management team for the REIT will remain basically unchanged. Five of the executives will become employees of the REIT instead of employees of Behringer Harvard. Furthermore, Mark T. Alfieri will replace Robert S. Aisner, who will remain an employee of Behringer Harvard, as the REIT’s CEO.

Typically, non-traded REITs carry a high commission, sometimes as high as 15 percent, which motivates brokers to make unsuitable recommendations to their clients. Non-traded REITs such as the Behringer Harvard Multifamily REIT I are attractive to investors because they carry a relatively high dividend or interest. However, in some instances brokers have sold the REITs without disclosing the risks of principal loss and/or the fact that the investor’s funds may be tied up for several years due to the limited market for resale of non-traded REIT shares.

Published on: September 12, 2013

Investigations into Unsuitable Sales of REITs, Variable Annuities by Royal Alliance Securities, LPL Financial Representatives

by InvestorLawyers

Investment fraud lawyers are currently investigating claims on behalf of individuals who suffered significant losses as a result of the unsuitable recommendation of non-traded REITs and variable annuities from Royal Alliance Securities- and LPL Financial-registered representatives.

Investigations into Unsuitable Sales of REITs, Variable Annuities by Royal Alliance Securities, LPL Financial Representatives

Reportedly, a claim has already been filed on behalf of one investor against Kathleen Tarr, a former representative of Royal Alliance Securities. Allegedly, Tarr recommended taking an early retirement option and then sold the investor unsuitable variable annuities and non-traded REITs. Prior to taking the early retirement option, the investor’s portfolio consisted of diversified retirement investments.

In addition, securities arbitration lawyers are investigating recommendations made by Brian Brunhaver, a former registered representative for LPL Financial. Allegedly, Brunhaver unsuitably recommended the purchase of the non-traded REITs, specifically Inland American and Inland Western, to a client. This client was seeking to make investments that would fund future college expenses. Because of the illiquidity of non-traded REITs, the investments could not be sold in time to meet the client’s needs.

Published on: September 5, 2013

Behringer Harvard REIT I is Now TIER REIT: New Name Doesn’t Solve Investor Problems

by InvestorLawyers

Behringer Harvard REIT I changed its name on June 21, 2013, to TIER REIT, Inc.

Behringer Harvard REIT I is Now TIER REIT New Name Doesn’t Solve Investor Problems

Despite the name change which, according to the REIT’S president Scott Fordham was supposed to symbolize “how the company reflects the goals and objectives of its tenants and stockholders in everything it does,” investors continue to be trapped in an investment they can’t sell except at a significant discount on the secondary market. Furthermore, according to stock fraud lawyers, the REIT continues to pay zero distributions.

To make matters worse, the REIT’s latest SEC quarterly report disclosed some disturbing information for investors. Reportedly, notes payable amounting to approximately $221.8 million will come due in 2013 and this amount may increase significantly because of several of the REIT’s loans, which are in default. As a result, the REIT may have to pay over $300 million before the end of 2013 because of its outstanding loans. In addition, the REIT had cash and cash equivalents of only $40.7 million and $71.3 million in restricted cash as of March 31, 2013.

Published on: August 15, 2013

Investors Could Recover Losses for TNP-Sponsored Investments

by InvestorLawyers

Stock fraud lawyers are currently investigating claims on behalf of investors who suffered significant losses in several TNP-sponsored investments, including the TNP 2008 Participating Notes Program LLC, sold by Berthel Fisher & Co. Financial Services Inc. and other full-service brokerage firms. Reportedly, around $26 million was raised from investors in total for the TNP 2008 Participating Notes Program and, though Berthel Fisher acted as the underwriter for the deal, the investment was also sold by other broker-dealers.

Investors Could Recover Losses for TNP-Sponsored Investments

According to the allegations made by one investor, Berthel Fisher failed to make the proper disclosures and perform adequate due diligence regarding the TNP 2008 Participating Notes Program. A complaint was filed in the U.S. District Court for the Northern District of Iowa on July 8, which stated, “Berthel Fisher had actual knowledge of the misrepresentations and omission in the 2008 [private-placement memorandum] and failed to investigate red flags that pointed to other misrepresentations and omissions.”

The deal’s sponsor, Thompson National Properties LLC, and chief executive Tony Thompson have also been under investigation by securities arbitration lawyers for the TNP Strategic Retail Trust Inc., a non-traded REIT, and the TNP 12% Notes Program. Allegedly, the TNP Strategic Retail Trust was recommended to many investors for which it was unsuitable, given their age, risk tolerances and investment objectives. Reportedly, the 12% Notes Program, which was designed to raise capital for tenant-in-common real estate operations, suspended interest payments to investors and was in danger of defaulting on two loans.

Published on: July 11, 2013

Steadfast Income REIT Investors Could Recover Losses

by InvestorLawyers

Investment fraud lawyers are currently investigating claims on behalf of Steadfast Income REIT investors. On June 28, 2013, Steadfast Income REIT Inc. was issued a cease-and-desist order by the Ohio Division of Securities for the announcement of price changes for the REIT 59 days before they took effect.

According to the order, “Steadfast’s decision to publicly announce an offering price increase 59 days prior to implementation of the price increase created a sale period that may have artificially increased investor demand for its securities.” The cease-and-desist order only orders a halt in the valuation price and does not stop sales of the Steadfast Income REIT.

On July 12, 2012, an estimated per share value of $10.24 was disclosed for the Steadfast Income REIT. However, securities arbitration lawyers say that the REIT continued to sell at the lower, $10 per share value until September 10, 2012. Reportedly, the announcement of a future valuation change harms shareholders by undercutting the investment’s current value.

Published on: July 9, 2013

Clients of Barry George Hartman, Rocky Mountain Financial, Could Recover Losses for Alleged Unsuitable Recommendations of REITs

by InvestorLawyers

Securities fraud attorneys are currently investigating claims on behalf of investors who suffered significant losses as a result of doing business with Rocky Mountain Financial LLC, FSC Securities Corporation and Barry George Hartman. Some of Hartman’s clients have alleged that he made unsuitable recommendations of high-risk securities, such as AIG stock, and committed sales practice violations regarding non-traded REITs, or Real Estate Investment Trusts.

According to stock fraud lawyers, some non-traded REITs may have carried a high commission, which in the past has motivated brokers to recommend the product to investors despite the investment’s unsuitability. The commission on a non-traded REIT is often as high as 15 percent. Many non-traded REITs carry a relatively high dividend or high interest, making them attractive to investors. However, non-traded REITs are inherently risky and illiquid, which causes them to be unsuitable for many investors.

Financial Industry Regulatory Authority rules have established that firms have an obligation to fully disclose all the risks of a given investment when making recommendations, and those recommendations must be suitable for the individual investor receiving the recommendation given his or her age, investment objectives and risk tolerance. Furthermore, securities fraud attorneys say brokerage firms must, before approving an investment’s sale to a customer, conduct a reasonable investigation of the securities and issuer.

Published on: June 27, 2013

CommonWealth REIT Shareholders Asked to Remove Directors; Investors Could Recover Losses

by InvestorLawyers

Investment fraud lawyers are currently investigating claims on behalf of investors who suffered significant losses in the CommonWealth REIT. Investigations into the CommonWealth REIT began when allegations were made in a lawsuit filed by an investor in the U.S. District Court for the District of Massachusetts regarding false and misleading statements about the REIT’s prospects and financial standings that were allegedly made between January 10, 2012 and August 8, 2012. Investigations continue in light of a recent letter sent in June 2013 urging shareholders to vote for the removal of all of the REIT’s directors.

CommonWealth REIT Shareholders Asked to Remove Directors; Investors Could Recover Losses

The letter was sent by Corvex Management LP and Related Fund Management LLC. Corvex and Related are separately managed investment funds. Together, they own around 9.6 percent of all outstanding CommonWealth REIT common shares.

The letter from Corvex and Related states: “An outdated management structure, abysmal corporate governance, and mismanagement of operations have in our view been a significant driver in the 45 percent decline in CommonWealth REIT’s stock price over the last five years. We believe this continued value destruction is by design — the direct result of self-interested actions taken by CommonWealth’s current Board of Trustees and its external manager, REIT Management and Research LLC (RMR) which is owned by Barry Portnoy and his son, Adam.”

Published on: June 25, 2013

Customers of Wendy J. Worchester, TNP Securities Could Recover Losses

by InvestorLawyers

Securities fraud attorneys are currently investigating claims on behalf of the customers of Wendy J. Worchester and TNP Securities LLC. According to a recent article in InvestmentNews, Tony Thompson’s non-traded REIT, or real estate investment trust, was suspended by the Financial Industry Regulatory Authority for five months because of a failure to conduct independent and adequate due diligence.

Worchester was the co-chief compliance officer of TNP Securities LLC, a broker-dealer under Thompson’s control. Worchester and TNP Securities were suspended from working with a FINRA affiliated broker-dealer and Worchester was fined $15,000. According to FINRA, Worchester’s failure in due diligence was regarding three TNP Securities-sponsored private placement offerings.

According to stock fraud lawyers, TNP suffered almost $25.8 million in losses in 2009, resulting in negative $13.6 million net equity while launching the TNP Strategic Retail Trust Inc., a REIT. Allegedly, both of the note programs and two of the private placements offered by Thompson used new investor money to pay old investors. Both note programs are now in default.