Securities America Under Investigation (again) Over Sale of Non-Traded REITs

Securities America Under Investigation (again) Over Sale of Non-Traded REITs

Securities America Under Investigation (again) Over Sale of Non-Traded REITs 150 150 Rex Securities Law

By Robert H. Rex, Esq.

Securities America, a subsidiary of Ladenburg Thalmann is under scrutiny by securities regulators again. This time it is the Pennsylvania Department of Banking and Securities and the investment product is non-publicly-traded real estate investment trusts (REITs)

Here is a listing of some of Securities America’s recent regulatory issues: 

MARCH 2014 UPDATE-PENNSYLVANIA REGULATORS INQUIRE RE: NON-TRADED REITS– Investment News reports that Pennsylvania Department of Banking and Securities has requested information from Securities America, Inc. concerning sales of non-traded REITs to residents of Pennsylvania since 2007.

Securities America settled with the Massachusetts Securities Division and paid $8.4 million in restitution to clients over the sale of non-traded REITs from 2005-2013. There are rules at the state level governing the amount of alternative investments like non-traded REITs that brokers are permitted to sell to clients. This is generally computed as a percentage of the investor’s liquid net worth. 

See this for listing of some of the most popular non-traded REITs. 

UPDATE MARCH 2014-FINRA Fines Securities America $625,000- To resolve allegations that Securities America issued statements to customers with inaccurate valuations and failure to supervise brokers, FINRA assessed a fine of $625,000. To read the entire FINRA News Release,see this. 

UPDATE JANUARY 2013–Kenneth R. Miller To resolve FINRA allegations that broker Kenneth R. Miller made material misrepresentations and ommissions in connection with the purchase and sale of limited partnerships, Miller was fined and suspended for a period of six months. FINRA alleged that Miller sold $1,375,000 of limited partnership interests by misrepresenting to customers the risk associated with these investments. FINRA records indicate that Miller was registered with these firms on the dates indicated: 

  • Prospera Financial Services, Inc.                 7/2011-9/2012
  • Securities America, Inc.                            11/2009-6/2011
  • NFP Securities, Inc.                                 12/2003-11/2009

– In March 2013, to resolve FINRA allegations that Securities America broker Azim Nakhooda sent emails to customers in connection with their purchase of IMH Secured Loan Fund and Medical Provider Funding Corp. V notes that contained false and misleading statements, Nakhooda agreed to pay a $50,000 fine and was suspended for nine months. Nakhooda’s misrepresented the liquidity and safety of these investments. 

In 2011, Securities America, along with other broker/dealers was slapped with a $250,000 fine by FINRA for selling two private placements , Provident Royalties and Medical Capital Holdings. That same year a FINRA arbitration panel ordered Securities America to pay over a million dollars for selling one of the private placements to an elderly client. For more information regarding Securities America’s disciplinary history, see this link

If you have questions about your brokerage account, call to speak with an experienced securities attorney.

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