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Written by 2:20 pm Blog, Current Investigations

SEC Investigating Lodging Fund REIT III – Shareholders may have claims  

SEC Investigating Lodging Fund REIT III - Shareholders may have claims , featured by top securities fraud attorneys, the White Law Group

Securities Investigation involving Lodging REIT Fund III 

The White Law Group continues to investigate potential securities claims involving broker dealers who may have improperly recommended Lodging Fund REIT III to investors. If you suffered losses investing in Lodging Fund REIT III, the securities attorneys at the White Law Group may be able to help you. 

 Lodging Fund REIT III Inc., a publicly registered non-traded REIT that invests in hotel properties, has reportedly disclosed in a filing with the Securities and Exchange Commission that the agency has issued a Wells notice to the company’s advisor, Legendary Capital REIT III, LLC, as well as to its senior executive, on Sept. 12, 2022. 

This reportedly follows the SEC’s inquiry into the reimbursement of certain expenses to its advisor, Legendary Capital REIT III LLC, as well as its disclosure of reimbursement policies and procedures on April 6, 2021. To learn more see: Lodging Fund REIT III Update on Investigation 

According to the DI Wire, the REIT has raised $75.3 million in investor equity, as of the fourth quarter of 2020, and owned a portfolio of seven hotel properties purchased for approximately $100 million.  

The Wells notice is not a formal allegation or finding of wrongdoing by the SEC against the Legendary Capital REIT III or its executive, who will have an opportunity to present their perspective before a decision is made by the SEC on whether to follow up with an enforcement proceeding. 

Non-traded REITs are high risk investments 

Non-real estate investment trusts (REITs) are complex and inherently risky products. Unfortunately for investors, many hospitality REITs have taken a hit due to the Covid-19 global pandemic, and some even suspended distributions during this uncertain time. 

Compared to traditional investments, such as stocks, bonds and mutual funds, REITs are significantly more complex and often better suited for sophisticated and institutional investors. 

Another problem often associated with REIT recommendations is the high sales commissions brokers typically earn for selling REITs – as high as 15%.  In addition to the high risks, non-traded REITs often lack liquidity. Investors looking to sell these investments often have difficulty finding a buyer, and if they are able to find one can suffer significant losses on the sale.  

Brokerage firms are required by the Financial Industry Regulatory Authority (FINRA) to disclose all the risks of an investment, prior to making recommendations to an individual investor. Recommendations should only be made if the investment is suitable for an individual investor given their age, investment objections, investment experience and risk tolerance. 

Brokerage firms that do not perform adequate due diligence on an investment and/or make unsuitable recommendations can be held accountable for investment losses through FINRA arbitration. 

If you are concerned about your investment in Lodging Fund REIT III, you may be able to file a complaint against your brokerage firm. Please call the securities attorneys of The White Law Group at 888-637-5510 for a free consultation. 

To learn more see: Lodging Fund REIT III Update on Investigation 

The White Law Group is a national securities fraud, securities arbitration, and investor protection law firm with offices in Chicago, Illinois and Seattle, Washington. 

For more information on The White Law Group, visit https://www.whitesecuritieslaw.com. 

  

  

 

 

 

 

 

Tags: , , , , , , , , Last modified: September 28, 2022