NEW YORK, Oct. 6, 2011 (GLOBE NEWSWIRE) -- The Securities Arbitration Law Firm of Klayman & Toskes ("K&T"), www.nasd-law.com, announced today that it is investigating the sales practices of full-service brokerage firms who solicited customers to invest in illiquid, non-traded real estate investment trusts ("REITs"), including Apple, Behringer Harvard, DBSI, Desert Capital, IMH Secure Loan Fund, Inland, KBS, LaeRoc, and Wells. K&T is presently prosecuting numerous securities arbitration claims before FINRA's arbitration department on behalf of investors of non-traded REITs.
Earlier this week, FINRA issued an investor warning concerning non-traded REITs. "Confronted with a volatile stock market and an extended period of low interest rates, many investors are looking for products that offer higher returns in turbulent times. However, investors should be wary of sales pitches that might play up non-traded REITs' high yields and stability, while glossing over the lack of liquidity, fees and other risks," said Gerri Walsh, FINRA's Vice President for Investor Education.
Further, FINRA proposed changes to its Rule 2340, which deals with customer account statements. The new proposal addresses brokers' commissions and other upfront costs. It would require that "all per-share estimated values, including those that are based on the offering price, reflect a deduction of all organization and offering expenses (net value)." Accordingly, an investor who buys a non-traded REIT at par, typically $10 a unit, would receive an initial account statement, less the broker's commissions and other expenses. In such cases, those non-traded REITs would be valued at $8.70 a unit. The proposed rule change relates to both non-traded REITs and private placement offerings sold by brokerage firms, like limited partnerships.
According to Steven D. Toskes, a partner at Klayman & Toskes, "We have successfully obtained recoveries for clients over the last several years in these same types of illiquid investment products. The danger of clients investing in illiquid products like these is that they are not freely tradable in the market place, but instead are dependent on valuation procedures which may not properly value the securities. Over the years, these valuation procedures have created conflicts of interest. This conduct appears to repeat itself as we have seen this many times before."
If you invested $200,000 or more in REITs and wish to discuss your legal options at no obligation, please contact Steven D. Toskes, Esquire or Jahan K. Manasseh, Esquire of Klayman & Toskes, P.A., at 888-997-9956, or visit us on the web at http://www.nasd-law.com