Written by D. Daxton White• March 18, 2014• 9:57 am• Blog, Securities Fraud Articles

FINRA Awards suggest REITs remain a problem

Based on recent awards, it appears that REITs continue to be a problem in the securities industry. From January 1, 2013 to December 31, 2013 there were 23 decided that at least mentioned REITs as an issue in the case.

A real estate investment trust (REIT) is a company that owns, and in most cases, operates income-producing real estate. REITs own many types of commercial real estate, ranging from office and apartment buildings to warehouses, hospitals, shopping centers, hotels and even timberlands. Some REITs also engage in financing real estate. The REIT structure was designed to provide a real estate investment structure similar to the structure mutual funds provide for investment in stocks.

A summary of the 2013 awards that at least mentioned REITs as an issue in the case and where an award was entered in favor of the Claimant are as follows:

Case No.	Claimant(s)	Respondent(s)	Award of Panel

12-02683	Sandra Goldberg, Samson and Dina Fixler, Mark and Sharon Kreindel, Natalie Wilbur, Ronald Rafal, and Lee Seidman, Individually and Lee Seidman as Trustee under the Lee G. Seidman Trust u/a dated 4/27/1987	Securities America, Inc.	Respondent is liable for and shall pay to Claimants Mark and Sharon Kreindel, the sum of $573,316.29 in rescission damages. Claimants Mark and Sharon Kreindel shall transfer to Respondent, Securities America, Inc., title to the shares of Behringer Harvard REIT I they purchased on 7/2/2008 for $250,000.00 and on 9/4/2008 for $268,000.00;
12-03116	Denise Hill	Ameritas Investment Corp. and James Roberts	Respondents Ameritas Investment Corp. and James Roberts, are jointly liable for and shall pay to Claimant, Denise Hill, the sum of $37,200.00 in compensatory damages.
12-02507	Robert L. Cox	Ameriprise Financial Services, Inc. and Mitchell William Black	Claimant, Robert L. Cox, is to convey ownership to Respondents, Ameriprise Financial Services, Inc. and Mitchell Black, of the following non-publically traded REITS; (1) C.P.A. 16 REIT; (2) KBS REIT; (3) Inland American REIT. Claimant Robert L. Cox, is to pay to Respondents, Ameriprise Financial Services, Inc. and Mitchell William Black, an amount of money equal to the total of all dividends and other distributions, if any, received by Claimant from the REITS during his ownership of these REITS. Respondents, Ameriprise Financial Services, Inc. and Mitchell William Black, are to pay Claimant, Robert L. Cox, an amount of money equal to the price that Claimant paid for the purchase of these REITS, in the amount of $650,000.00; Respondents, Ameriprise Financial Services, Inc. and Mitchell William Black, are liable and shall pay to Claimant the amount of $111,824.00. This represents equitable relief in the form of relinquishment of certain commissions (“Gross Dealer Concessions”) received by Respondents “Retirement Advisor Variable Annuity” and a “RiverSource Retirement Advisor Variable Annuity” and return of fees charged to Claimant and paid to Respondents for Financial Plans; Respondents, Ameriprise Financial Services, Inc. and William Mitchell Black are liable for and shall pay to Claimant, Robert L. Cox, costs for expert witness fees in the amount of $14,000.00; Respondents, Ameriprise Financial Services, Inc. and Mitchell William Black are liable and shall pay to Claimant, Robert L. Cox, $600.00 as reimbursement of the non-refundable filing fee.
10-03787	Snow E. Jaynes, individually, as trustee of the Snow E. Jaynes Living Trust 9/1/1999, and as the owner and beneficiary of the Snow Jaynes IRA	Daniel Dennis Shea	Respondent Shea is liable for and shall pay to Claimant the amount of $356,476.71 in compensatory damages; Respondent Shea is liable for and shall pay to Claimant the amount of $10,000.00 in sanctions, pursuant to Rule 12212 of the Code. Respondent Shea is liable for and shall pay to Claimant the amount of $71,295.34 in attorneys fees, pursuant to the Federal Arbitration Act, 9 U.S.C.A. Sections 1-14, and California Civil Code Section 1717. Claimant requested an express finding of fraud. The Panel expressly find that Respondent Shea acted with intent to defraud Claimant and in fact did defraud Claimant. The Panel includes this specific find of fraud to prevent any subsequent bankruptcy discharge of the terms of this Award.
11-04766	Dr. Peter A. Accetta, Suzanne Rusconi Accetta as Trustee of the Suzanne Rusconi Accetta Revocable Trust Amended and Restated 3-29-04, Michael W. Buckingham, Chester E. Scott and Dr. Ronald E. Pyka	Multi-Financial Securities Corporation	Claimants, Dr. Peter Accetta and Michael Buckingham’s, claims are hereby denied and dismissed with prejudice; Respondent Multi-Financial Securities Corporation, is liable for and shall pay to Claimant, Suzanne Rusconi Accetta as Trustee of the Suzanne Rusconi Accetta Revocable Trust Amended and Restated 3-29-04, the sum of $37,000.00 in compensatory damages; Respondent Multi-Financial Securities Corporation, is liable for and shall pay to Claimant Chester E. Scott, the sum of $37,000.00 in compensatory damages; Respondent, Multi-Financial Securities Corporation, is liable for and shall pay to Claimant, Dr. Ronald E. Pyka, the sum of $37,000.00 in compensatory damages
11-03704	Eugene Opatz and Ruth Opatz	David Alan Theis	Respondent David Alan Theis, is liable for and shall pay to Claimant, Eugene Opatz, the sum of $222,135.30 in compensatory damages; Respondent David Alan Theis, is liable for and shall pay to Claimant Eugene Opatz the sum of $250,000.00 in punitive damages; Respondent David Alan Theis, is liable for and shall pay to Claimant, Eugene Opatz, attorneys fees in the amount of $115,499.80; Respondent David Alan Theis is liable and shall pay to Claimant Ruth Opatz, the sum of $113,588.60 in compensatory damages; Respondent David Alan Theis, is liable for and shall pay to Claimant Ruth Opatz, the sum of $250,000.00 in punitive damages; Respondent David Alan Theis is liable for and shall pay to Claimant, Ruth Opatz, attorneys fees in the amount of $52,886.70;
12-03217	Dr. Judith C. Engelman, MD and Mr. Harry J. Rubinoff, a married couple	United Securities Alliance, Inc.	The Arbitrator finds for Claimants on the following causes of action: negligence, negligent misrepresentation, breach of contract, and failure to supervise. All other causes of action are denied. Respondent United Securities Alliance, Inc. is liable for and shall pay to Claimants the amount of $94,946.56 in compensatory damages.

Financial advisors have a fiduciary duty to put their client’s needs ahead of their own. If a stockbroker recommends an investment that is unsuitable for the client or fails to perform adequate due diligence on an investment, the advisor and his/her firm can be held liable for the resulting losses.

The White Law Group continues to investigate the liability that brokerage firms have for recommending REITs unsuitably. The firm has filed FINRA arbitrations to try to recover losses in the following REITs (among others): Desert Capital REIT, Behringer Harvard, Wells REIT, Hines REIT, KBS REIT, CNL Lifestyle, Inland America, Inland Western, Apple REIT, Wells Timberland, Cornerstone REIT, and Cole REIT.

If you believe that you are the victim of your advisor recommending a REIT to you inappropriately, please call the securities attorneys of The White Law Group at 312/238-9650 for a free consultation.

The White Law Group is a national securities fraud, securities arbitration, and investor protection law firm with offices in Chicago, Illinois and Boca Raton, Florida. For more information on The White Law Group visit http://whitesecuritieslaw.com.