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Written by 4:50 pm Blog, Securities Fraud Articles

LPL sued by Massachusetts securities regulators

According to reports, Massachusetts securities regulators have sued LPL Financial, LLC over sales practices of brokers regarding non-traded REITs.

Apparently the Secretary of the Commonwealth charged LPL Financial with a failure to supervise registered reps who sold the nontraded REITs in violation of both state limitations and the company’s rules. The Securities Division also charged LPL Financial with dishonest and unethical business practices.

The charges stem from sales of $28 million of nontraded REITs to almost 600 clients from 2006 to 2009. Of those transactions, the Securities Division found that 569 had regulatory violations. Those included sales made in violation of Massachusetts 10% concentration limits; sales made in violation of prospectus requirement; and sales made in violation of LPL compliance practices.

The Massachusetts probe focused on seven non-traded REITS sold by LPL brokers.  Of the REITs listed in the complaint, the largest amount of sales was for Inland American Real Estate Trust Inc. (Massachusetts investors allegedly put at least $20.1 million in Inland American).  (Inland American is separately the focus of a fact-finding investigation by the Securities and Exchange Commission).

Massachusetts is seeking full restitution to clients in the state who were sold REITs allegedly in violation of state and prospectus requirements. It is also seeking an unspecified administrative fine against the firm.

The White Law Group has been filing FINRA claims involving non-traded REITs for some time and continues to investigate claims similar to those described by the State of Massachusetts in its complaint.

Financial advisors and broker-dealers have a duty to their clients to perform the necessary due diligence on an investment before offering it for sale to their clients and to ensure that any investment recommendation that is made is suitable in light of the client’s age, investment experience, net worth, and investment objectives.

The White Law Group has found that financial advisors often improperly sell non-traded REITs because of the large commissions involved (LPL apparently received at least $1.8 million in commissions on the deals during the period in question in the Massachusetts complaint).  Other problems with non-traded REITs are that they do not trade on exchanges, provide no liquidity for long periods of time and carry fees of as much as 15 percent.

If you invested in a non-traded REIT with LPL Financial and would like to discuss your litigation options, 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 https://whitesecuritieslaw.com.

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