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Written by 9:13 pm Blog, Securities Fraud

Can You Recover Wells REIT II Investment Losses after the Share Price Drop?

Are you an investor in the Wells Real Estate Investment Trust II (Wells REIT II) and are disturbed by the recent announcement that the value of your shares in Wells REIT II has dropped more than 25% from the par value of $10 to an estimated $7.47 per share? Are you wondering if you can recover your investment losses in Wells REIT II? The White Law Group may be able to assist you in recovering your non-traded REIT damages through the FINRA arbitration process.

The investmentnews.com reported the drop in share price on November 9th and stated that this drop “highlights regulators’ concerns with nontraded real estate investment trusts.” Among the issues that regulators are concerned with is how the values of shares are listed on non-traded REIT investor statements. We have previously written about a FINRA proposal that is an attempt to require more transparency in how shares are reflected on customer statements and regulate how fast valuations of the investments must take place after the initial offering (http://www.whitesecuritieslaw.com/2011/09/28/finra-proposal-to-insist-on-faster-valuations-of-non-traded-reits/).

The reason why FINRA is pushing this proposal is in part because investors in non-traded REITs are often left in the dark about how much their investments are truly worth. While, as the investmentnews.com reports, Wells REIT II announced a new estimated value for the shares “in line with industry standards” and as they promised they would before the end of the year, it also shows how investors can realize that their investment in a non-traded REIT is worth far less than they anticipated overnight. The FINRA proposal also wants the costs and commissions involved in the purchase of non-traded REITs to be reflected in the shares’ initial par value.

This proposal is just one reason FINRA has been paying attention to non-traded REITs this year. They are also paying close attention to the ways in which broker-dealers marketed and sold the products to investors. In many cases, and notwithstanding the risk of REIT investments, broker-dealers marketed these investments as safe and secure.

REITs typically pay a high commission – up to as much as 15% – which may, in some cases, explain the stockbroker’s motivation in recommending the REIT investment to the investor. Brokerage firms have a fiduciary duty to perform due diligence on any investment and to insure that an investment is appropriate in light of the investor’s age, investment experience, and investment objectives. If a broker fails in this responsibility, investors may have an actionable claim to recover their losses in a product in a claim through FINRA dispute resolution.

If you are concerned about your investment in the Wells Real Estate Investment Trust II (Wells REIT II) and would like to speak to a securities attorney about your ability to recover your investment losses through FINRA please call our Chicago office at 312-238-9650.

The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Boca Raton, Florida.

For more information on The White Law Group, please visit our website at http://www.whitesecuritieslaw.com.

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