New York Securities Lawyer Blog
On December 12, 2012, William Galvin, the Massachusetts Secretary of the Commonwealth, filed an Administrative Complaint in order to commence an adjudicatory proceeding against LPL Financial, LLC (“LPL”) regarding sales practice abuses in connection with the sale of non-traded Real Estate Investment Trusts (“REITs”). The Administrative Complaint, amongst other things, alleges that LPL sold approximately $28 million of the non-traded REITs to approximately 600 customers in seven (7) non-traded REITs from 2006 through 2009. These sales allowed LPL to generate a gross commission of at least $1.8 million during that time period by charging enormous sales commissions and offering fees ranging from fifteen percent (15%) to eighteen percent (18%).
Specifically, the Administrative Complaint focuses on the sale of one particular non-traded REIT, the Inland American Real Estate Trust. The Administrative Complaint states, “[t]he Enforcement Section’s investigation revealed significant and widespread problems with LPL’s adherence with product prospectus and Massachusetts requirements.” See Administrative Complaint, page 3. The Administrative Complaint also states, “LPL Representatives frequently made transactions in violation of product prospectus and Massachusetts requirements. . . LPL’s lack of adequate training and supervision only exacerbated problems resulting from LPL’s oversight of non-traded REIT prospectus and Massachusetts state requirements” See Administrative Complaint, page 4. The Administrative Complaint alleged violations of various Massachusetts State Securities Laws and violations of the Standards of Commercial Honor and Principles of Trade, and requested an order requiring LPL to permanently cease and desist from further sales practice abuses regarding the non-traded REITs.
Lax & Neville LLP can effectively assist investors, on both a regional and national level, that may have suffered losses as a result of their broker dealer’s sales practice abuses, including losses suffered as a result of investments in non-traded REITS. Please contact our team of securities fraud attorneys for a consultation at (212) 696-1999.