REIT Fraud and Market Volatility
Increased market volatility has led many investors to look for products that offer more stability. Some non-traded REITs have claimed that they can do exactly that, offer a stable investment in the volatile real estate investment market. As industry watchdog organizations like the Financial Industry Regulatory Authority and SEC have recently noted, this may not be the case.
Non-traded REIT valuation has been a major problem. Speaking in the New York Times SEC attorney Michael McTiernan was quoted as saying of non-traded REITs: "One common sales tactic we object to is the suggestion that they are eliminating volatility simply because they don't tell you what the value is" adding "It’s not that it's not volatile. It's just that you don't know."
Front End Fees
A lack of honest disclosure may not be the only potentially fraudulent aspect of some non-traded REITs. Other ways investors may be deceived into purchasing shares of non-traded REITs is through unrealistic expectations for returns on their investments.
While brokers may sell investors on non-traded REITs high annual dividends, analysts who studied REITs in general have concluded that in some cases non-traded REITs may in fact offer no return on an investment at all due to high up-front fees amounting to as much as 16 percent. In some cases, these fees go to pay brokers who sell the products and the directors and officers that oversee the funds leaving as little as 85% of the original investment to go towards real estate.
Non-Traded REIT Investigations
In addition to the SEC and FINRA's investigations, Girard Gibbs' securities lawyers have filed a securities class action lawsuit against David Lerner and Associates alleging the firm presented misleading performance information in marketing Apple REITs and failed to perform sufficient research to know whether or not the REITs were suitable for investors.
We are also currently investigating complaints from investors against Behringer Harvard REIT for similar allegations.
Report REIT Fraud to a Lawyer
If you believe you or someone you know has been misled, deceived, or defrauded in purchasing a non-traded REIT contact us. Free and confidential consultations with our securities attorneys are available by calling toll-free (866) 981-4800 or filling out the form to the right.
Why Girard Gibbs?
Girard Gibbs is a national litigation firm representing consumers, investors, employees, and small businesses in cases involving consumer protection, personal injury, securities, antitrust, and employment laws. The firm’s senior partners, Daniel Girard and Eric Gibbs, have been selected for inclusion in The Best Lawyers in America® 2012 and Northern California Super Lawyers, and have earned AV-Preeminent ratings from Martindale-Hubbell, recognizing them in the highest class of attorneys for professional ethics and legal skills.
