Investor Lawyers Blog
Securities fraud attorneys are currently investigating claims on behalf of customers of ProEquities Inc. Allegedly, ProEquities has engaged in the inappropriate sale of speculative and illiquid investments, including non-traded REITs.
In one recent claim, a couple from Minnesota read an ad in the newspaper that reportedly contained the words “Retirement” and “Safe.” After reading this ad, they attended a seminar, during which an advisor for ProEquities reportedly used the catchphrases “no stock market risk” and “retirement income – net of fees and expenses.” He allegedly emphasized investments that supposedly avoided exposure to the stock market and risk.
Following the seminar, stock fraud lawyers say the couple followed the advice of the advisor. They invested the majority of their savings according to the ProEquities advisor’s ongoing advice. The investments they made turned out to be highly speculative and illiquid non-traded REITs. ProEquities sold the couple the following products: Behringer Harvard Multifamily REIT I, Behringer Harvard REIT I, ATEL Growth Capital Fund III and LEAF Equipment Leasing Income Fund III.
According to the allegations, the couple was led to believe that the investments were safe and would produce a constant income source. However, shares of Behringer Harvard REIT I were revalued from $10 per share to $4.64 per share, a 53 percent reduction in the value of the couple’s investment. Furthermore, the REIT’s distributions, which were originally set at 7 percent, were cut to 3.5 percent, then to 1 percent, and ceased altogether in December 2012. The couple also alleges they were assured that they could sell their shares in all of the products at any time, but redemptions have been suspended indefinitely for Behringer Harvard REIT I and Behringer Harvard Multifamily REIT I’s redemption policy would require them to forfeit a significant portion of their shares if they redeem. The other two investments, the Leaf Equipment Leasing Income Fund and ATEL Growth Capital Fund, have similar problems.
According to securities fraud attorneys, non-traded REITs typically carry a high commission, motivating brokers and advisors to make recommendations that are unsuitable. Allegedly, the firm and its advisor received from 7 to 10.5 percent commissions for the sale and recommendation of these projects. According to the allegations listed in the claim, the couple was told the commissions would come from the companies when, in fact, the advisor knew it was the couple who would pay the commissions.
If you received the unsuitable recommendation of a non-traded REIT and/or were not made aware of the risks of the investment, you may have a valid securities arbitration claim. To find out more about your legal rights and options, contact a stock fraud lawyer at The Law Office of Christopher J. Gray at (866) 966-9598 for a no-cost, confidential consultation.