FINRA hits Western International Securities with $400,000 Fine plus Restitution for Supervisory Failures regarding Non-traded REITs
According to a Letter of Acceptance Waiver and Consent, the Financial Industry Regulatory Authority sanctioned Western International Securities for alleged supervisory failures regarding non-traded REITs.
From 2013 to 2017, Western International allegedly failed to establish, maintain, and enforce a supervisory system, including written supervisory procedures, in connection with recommendations of non-traded real estate investment trusts (non-traded REITs), according to the letter. In addition, between 2015 and 2022, Western purportedly failed to report or timely report approximately 45 written customer complaints, customer arbitrations, and settlements.
FINRA reportedly censured Western International and fined the firm $400,000 plus restitution of $471,401.57 plus interest.
Non-traded REITs are Complex, High-risk Investments
Non-traded REITs are illiquid. As their name implies, non-traded REITs have no public trading market. However, most non-traded REITS are structured as a “finite life investment,” meaning that at the end of a given timeframe, the REIT is required either to list on a national securities exchange or liquidate. Even if a liquidity event takes place, there is no guarantee that the value of your investment will have gone up—and it may go down or lose all its value.
Further, non-traded REITs typically have high commissions and fees – sometimes as much as 15%. High commissions could be a motivating factor for unscrupulous financial advisors to sell a non-traded REIT regardless of whether the investment is in line with the client’s investment objectives and profile.
Distributions are not guaranteed and may exceed operating cash flow. Deciding whether to pay distributions and the amount of any distribution is within discretion of a REIT’s Board of Directors in the exercise of its fiduciary duties. If a REIT issuer is behind or incomplete in its SEC filings this can be a red flag.
Brokers are required to make suitable investment recommendations that are in line with the customer’s age, financial situation, investment objective and investment experience. Investment in a non-traded REIT may be unsuitable, or the amount or frequency of transactions may be excessive and therefore unsuitable for a given customer.
Free Consultation with a Securities Attorney
This information is all publicly available and provided to you by the White Law Group. If you are concerned about your investment losses in a non-traded REIT, the White Law Group may be able to help you.
For a free consultation with a securities attorney, please call the White Law Group at (888) 637-5510. To learn more about Western International Securities please see: Western International Securities Customer Complaints & Regulatory Actions
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 Seattle, Washington. For more information, please visit our website, www.whitesecuritieslaw.com.
Tags: Western International non-traded REITs, Western International Securities complaints, Western International Securities fined, Western International Securities investment losses, Western International Securities lawsuit, Western International Securities regulatory actions Last modified: December 14, 2022