Articles Tagged with National Planning Holdings

shutterstock_150746According to InvestmentNews, recently several brokerage firms including Securities America Inc., with 1,772 registered reps and advisers, and the four National Planning Holdings Inc. firms with 3,954 registered reps and advisers including INVEST Financial Corp., Investment Centers of America Inc., National Planning Corp., and SII Investments Inc., announced that they are temporarily suspending some or all of the non-traded real estate investment trust (Non-Traded REITs) sales sponsored or distributed by American Realty Capital and its affiliated companies.

These Non-Traded REITs include investments such as the Phillips Edison-ARC Grocery Center REIT II and Cole Capital Properties V. The decision to halt sales come as Nicholas Schorsch, ARC’s chairman, faces further investigation after it had been revealed that the traded REIT he controls, American Realty Capital Properties Inc., made a $23 million accounting error that resulted in the firing of its chief financial officer.

The firms halted the sales in order to conduct further due diligence on the Non-Traded REIT products. Suspending sales of these products will likely help protect the firms if it is later revealed that the irregularities are more widespread. Brokers have a duty to have a reasonable basis for recommending that Non-Traded REITs are suitable for investors. This means that the firm has investigated the product and believes that the information disclosed to investors has a factual basis. If a Non-Traded REIT, its parent company, or principals are under investigation for making material misstatements it would be difficult for the firm to later argue that it had a basis for believing that the information it provided to investors was accurate.

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