FINRA Eyes Nontraded REIT Sales Practices Of Broker Dealers

Nontraded real estate investment trusts (REITs) apparently are a subject of interest by the Financial Industry Regulatory Authority (FINRA). A March 30 article in the Wall Street Journal reported that the independent regulator of the securities industry is seeking information from a number of broker-dealers about their sales and promotion practices of the entities. 

According to the Journal story, a letter dated March 20 was sent by FINRA to an “unknown number of brokerages” requesting details about nontraded REIT sales, as well as cash and non-cash incentives. Included in the letter was a request for detailed information regarding each nontraded REIT offered for sale, the number of shares sold to customers, the number of customers who each nontraded REIT and their age groups.  

The nontraded REITs in question include those that are registered with the Securities and Exchange Commission (SEC) but not on an exchange or over-the-counter market. They also include private REITs, which are sold using an exemption to registration.  

FINRA also wants information from broker dealers about payout schedules of registered representatives, blank customer applications, and risk monitoring reports that were used to track any activity in nontraded REITs, according to the Wall Street Journal. 

Broker dealers have until April 13 to respond to FINRA’s request for information about their dealings with nontraded REITs.

This entry was posted on Thursday, April 2nd, 2009 at 11:18 am and is filed under REITs. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.