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Home > Blog > B-Ds to Pay $10.7M to Investors Over Improper REIT Sales

B-Ds to Pay $10.7M to Investors Over Improper REIT Sales

Massachusetts securities regulators are continuing their focus on the sales practices of broker/dealers that market and sell non-traded real estate investment trusts (REITs), as five firms agree to pay $10.75 million in restitution to Massachusetts investors who bought the products from 2005 to today.

Secretary of the State William Galvin announced the REIT settlements yesterday. The five firms and their respective settlements include: Securities America, $7.6 million; Ameriprise, $1.6 million; Lincoln Financial Advisors Corp., $840,873; Commonwealth Financial Network, $533,500; and Royal Alliance Associates, $125,000.

This is the second round of settlements tied to improper sales of non-traded REITs. In May, the same five broker/dealers agreed to pay $6.1 million in restitution, along with fines of $975,000. In February 2013, Galvin’s office ordered LPL Financial to pay $2 million in restitution to clients in connection to non-traded REITs.

“These investments are popular, but risky,” Galvin said in a statement about the recent settlements. “Our investigation showed widespread problems with adherence to the firms’ own policies as well as the state rule that an investor’s purchase of REITs cannot be more than 10 percent of that person’s liquid net worth.”

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