Articles Posted in REITs

shutterstock_175835072-300x199The securities lawyers of Gana LLP are investigating investor losses in Strategic Realty Trust (SRT), a non-traded real estate investment trust (Non-Traded REIT).  SRT is a non-traded REIT focused on owning high quality west coast urban and street retail properties. The company states that its strategy is to build a portfolio of retail properties with solid growth prospects, strong cash flows, and visible value appreciation characteristics.

According to a secondary market providers which allow investors to bid and sell illiquid products such as Non-Traded REITs, SRT sells for just under $5.00 per share – a significant loss on the original purchase price of $10.00.

Our firm often handles cases involving direct participation products (DPPs), private placements, Non-Traded REITs, and other alternative investments.  These products are almost always unsuitable for middle class investors.  In addition, the brokers who sell them are paid additional commission in order to hype inferior quality investments providing perverse incentives for brokers to sell high risk and low reward investments.

According to studies, non-traded REITs have historically have underperformed even safe benchmarks, like U.S. treasury bonds – meaning that non-traded REITs provide paltry investment returns considering the risk an investor takes.  Alternative investment products like oil and gas partnerships, REITs, and equipment leasing programs are only appropriate for a narrow band of investors under certain conditions due to the high costs, illiquidity, and huge redemption charges of the products, if they can be redeemed at all.

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shutterstock_34872913-300x209Former Newbridge Securities Corporation (Newbridge) broker Austin Dutton (Dutton) has been subject to two complaints and a recent sanction citing dishonest or unethical practices in the securities business by the Pennsylvania Department of Banking and Securities and fining Dutton $200,000.  According to a BrokerCheck report Dutton recommended the purchase of a security to at least one customer without reasonable grounds to believe that the transaction was suitable for the customer.

In addition, Dutton’s firm, Newbridge, was also sanctioned by the state of Pennsylvania on findings that “From in or about January 2012 until December 2016, Newbridge did not maintain a reasonable system for applying and enforcing written procedures pertaining to their sales of structured products by one agent in Pennsylvania to certain of his clients…”  While The order does not name the broker it appears reasonably related to Dutton.

According to newssources, Dutton is known to have recommended and sold and direct participation products (DPPs) such as non-traded real estate investment trusts (REITs).  In particular Dutton sold real estate investment trusts formerly managed by Nicholas Schorsch’s private firm, American Realty Capital (ARC), now AR Global.  An accounting scandal affected ARC and its REITs.  According to sources, Dutton sold these products to retirees and police officers.

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shutterstock_175835072-300x199The securities lawyers of Gana LLP are investigating investor losses in American Realty Capital Hospitality Trust Inc. (Hospitality Trust), a non-traded real estate investment trust (Non-Traded REIT).  The company then changed its name to Hospitality Investors Trust Inc.

Hospitality Trust acquires select-service lodging properties and brand national hotel.  Hospitality Trust initial offering was January 2014 and raised $911 million.  Hospitality Trust suspended dividend distributions in January 2017 and is not currently offering a redemption plan to shareholders trapping investors in the product.

According to a secondary market providers which allow investors to bid and sell illiquid products such as Non-Traded REITs, Hospitality Trust sells for just $10.50 per share – a significant loss on the original purchase price of $25.00.

Our firm often handles cases involving direct participation products (DPPs), private placements, Non-Traded REITs, and other alternative investments.  These products are almost always unsuitable for middle class investors.

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shutterstock_85873471-300x200Calton & Associates, Inc. (Calton) broker Nicolas Toadvine (Toadvine) has been subject to numerous complaints over non-traded REITs and real estate related investments.  According BrokerCheck Lynn has been subject to 12 customer complaints in total and declared bankruptcy in 2013.  The securities lawyers of Gana LLP are investigating the customer complaints against Toadvine.

Many of the complaints concern private placements and direct participation products (DPPs) such as non-traded real estate investment trusts (REITs).

All of these investments come with high costs and historically have underperformed even safe benchmarks, like U.S. treasury bonds.  For example, products like oil and gas partnerships, REITs, and other alternative investments are only appropriate for a narrow band of investors under certain conditions due to the high costs, illiquidity, and huge redemption charges of the products, if they can be redeemed.  However, due to the high commissions brokers earn on these products they sell them to investors who cannot profit from them.  Further, investor often fail to understand that they have lost money until many years after agreeing to the investment.  In sum, for all of their costs and risks, investors in these programs are in no way additionally compensated for the loss of liquidity, risks, or cost.

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shutterstock_80511298-300x218Broker James Lynn (Lynn) was recently terminated by his former employer Voya Financial Advisors, Inc. (Voya).  According BrokerCheck  Voya alleged that Lynn provided misleading information to the firm during a complaint investigation.  In addition to the termination, Lynn has been subject to six customer complaints, one bankruptcy and three judgments or tax liens.  The securities lawyers of Gana LLP are investigating the customer complaints against Lynn.

Many of the complaints concern variable annuities or direct participation products (DPPs) such as non-traded real estate investment trusts (REITs).  The most recent complaint filed in May 2017 requested $115,000 in damages alleging that the investor claimed the that the REIT investments and the replacement of a variable annuity policy was unsuitable. The REITs were purchased in 2014 and 2015.  The claim is currently pending.

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shutterstock_182004416-300x200Broker John Oldham (Oldham) was recently sanctioned by The Financial Industry Regulatory Authority (FINRA) in an enforcement action.  According to the FINRA AWC (Letter of Acceptance, Waiver, and Consent 2015046203101) FINRA found that Oldham consented to sanctions that he shared commissions from the sales of alternative investments with an unregistered entity. According to FINRA, Oldham facilitated the sales of the alternative investments totaling more than $4.8 million to customers referred to him and shared commissions with the unregistered entity in the amount of $240,000 for these transactions.  FINRA found that while Oldham executed subscription agreements on behalf of the third-party, in some instances this representation on those forms were inaccurate because Oldham had not communicated with the customer who had executed the subscription agreement.

The securities lawyers of Gana LLP are investigating the regulatory complaint against Oldham.  In addition to the regulatory action, there is one employment termination for cause listed for Oldham alleging possible violation of FINRA Rule 2040.

Our firm often handles cases involving direct participation products (DPPs) and private placements including oil and gas partnerships, non-traded real estate investment trusts (REITs), and other alternative investments.

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shutterstock_175835072-300x199The investment fraud attorneys with Gana LLP are investigating customer complaints filed with The Financial Industry Regulatory Authority (FINRA) against Gary Saitowitz (Saitowitz) currently not associated with any broker-dealer.  According to brokercheck records Saitowitz has been subject to three customer complaints, declared bankruptcy in March 2015, was terminated for cause by Transamerica Financial Advisors, Inc. (Transamerica), and sanctioned by FINRA in January 2017.  Saitowitz’s termination for cause and FINRA sanctions involve his conduct concerning direct participation products (DPPs) such as non-traded real estate investment trusts (REITs) and potentially other alternative investments.

In January 2017, Saitowitz consented to FINRA sanctions that he had customers sign blank and incomplete brokerage forms and that some of the pre-signed forms authorized fund movement or loans from customer accounts, while others related to customer financial information, used by the firm to supervise whether transactions solicited by Saitowitz were suitable for customers. FINRA found that the maintaining of pre-signed forms enhanced the risk that customers would be placed in unsuitable investments or subject to unauthorized account activity.  FINRA also found that his brokerage firm imposed limits on the amount of a customer’s liquid assets that could be invested in non-traded REITs but that in order to circumvent the limits Saitowitz maintained records overstating the liquid net worth of certain customers in connection with sales of non-traded REITs.

FINRA also found that Saitowitz used personal email addresses to conduct securities business in contravention of the firm’s policies and procedures. Finally, FINRA also determined that Saitowitz failed to report a judgment and a tax lien and to timely report five tax liens.

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shutterstock_170709014-225x300Customers have filed complaints and The Financial Industry Regulatory Authority (FINRA) recently barred broker John Hudnall (Hudnall) – formerly with U.S. BanCorp Investments, Inc. (U.S. BanCorp). The securities attorneys at Gana LLP are investing the allegations against Hudnall including unsuitable investments among other claims.  According to brokercheck records Hudnall has been subject to six customer complaints and one criminal matter.  Many of the complaints involve direct participation products (DPPs) and variable annuities such as non-traded real estate investment trusts (REITs) and other alternative investments.

In FINRA’s complaint against Hudnall it was alleged that he participated in an undisclosed and unapproved private securities transaction by selling a REIT investment to an elderly customer which he split into two simultaneous transactions of $40,000 and $360,000. FINRA alleged that Hudnall did this to circumvent his firm’s supervisory review of such a large transaction of this kind.  According to FINRA, the $400,000 REIT investment exceeded the firm’s supervisory thresholds and would have triggered additional supervisory review and likely would have been disapproved. FINRA also alleged that Hudnall made a promotional offer in which he promised to pay certain customers who purchased fixed annuities 1% annual interest if they held their fixed annuities for at least a year, when in fact this offer was not part of the fixed annuity product that he was selling.

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shutterstock_36343294-300x225Customers have filed complaints filed with The Financial Industry Regulatory Authority (FINRA) against IMS Securities, Inc. (IMS) broker Beth Debouvre – a/k/a Beth Bunnell (Debouvre).  The securities attorneys at Gana LLP are investing the allegations against Debouvre including unsuitable investments, breach of fiduciary duty, and misrepresentations among other claims.  According to brokercheck records Debouvre has been subject to three customer complaints.  Many of the complaints involve direct participation products (DPPs) such as non-traded real estate investment trusts (REITs), equipment leasing funds – such as LEAF or ICON, and other alternative investments.  According to Debouvre’s disclosures she conducts business under the d/b/a Grosse Point Financial Services, LLC and Hawthorne Financial LLC.

In May 2016 a customer filed a complaint alleging unsuitable investments and negligence involving non-traded REITs.  The customer claimed damages of $450,000.  The claim is currently pending.

Our firm has represented many clients in illiquid alternative investments products.  All of these investments come with high costs and have historically underperformed even safe benchmarks, like U.S. treasury bonds.  For example, products like oil and gas partnerships, REITs, and other alternative investments are only appropriate for a narrow band of investors under certain conditions due to the high costs, illiquidity, and huge redemption charges of the products, if they can be redeemed at all.  However, due to the high commissions brokers earn on these products they sell them to investors who cannot profit from them and have created a large market for a failed product.  Further, investor often fail to understand that they have lost money in these illiquid investments until many years after investing.  In sum, for all of their costs and risks, investors in these programs are in no way additionally compensated for the loss of liquidity, risks, or cost.

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shutterstock_178801067Our investment attorneys are investigating customer complaints filed with The Financial Industry Regulatory Authority (FINRA) against Paul Neves (Neves) currently associated with Securities America, Inc. (Securities America) alleging unsuitable investments, breach of fiduciary duty, common law fraud, and elder abuse among other claims.  According to brokercheck records Neves has been subject to five customer complaints.  Many of the complaints involve direct participation products (DPPs) such as non-traded real estate investment trusts (REITs), equipment leasing funds – such as LEAF or ICON, and other alternative investments.

In November 2015 a customer filed a complaint alleging unsuitable investments and elder abuse.  The customer claimed damages of $800,000.  The claim is currently pending.

Our firm has represented many clients in illiquid alternative investments products.  All of these investments come with high costs and have historically underperformed even safe benchmarks, like U.S. treasury bonds.  For example, products like oil and gas partnerships, REITs, and other alternative investments are only appropriate for a narrow band of investors under certain conditions due to the high costs, illiquidity, and huge redemption charges of the products, if they can be redeemed at all.  However, due to the high commissions brokers earn on these products they sell them to investors who cannot profit from them and have created a large market for a failed product.  Further, investor often fail to understand that they have lost money in these illiquid investments until many years after investing.  In sum, for all of their costs and risks, investors in these programs are in no way additionally compensated for the loss of liquidity, risks, or cost.

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