InvenTrust Properties was formerly recognized as Inland American Real Estate Trust, Inc. During the years 2017-2018, a number of independent investment companies presented unsolicited tender bids for this REIT. The firm states that its main concentration revolves around the acquisition, leasing, and renovation of open-air shopping centers situated in vital expansion regions.
Between 2005 and 2009 shares were offered for $10/share, generating $8 billion. Central Trade and Transfer (a secondary market source) reported that the most recent sponsor-stated value was $3.14/share. The trading range for this period, however, was much lower, between $1.36/share and $1.42/share. Many investors could suffer significant losses, particularly if they paid near or at the $10/share price.
Investment fraud lawyer, Jason Haselkorn, Esq. Haselkorn is a partner at Haselkorn & Thibaut P.A. His office received from investors who suffered losses on InvenTrust or similar non-traded investments. Some of these investments were not properly represented at the point sale, and others are investments that resulted from negligent supervision.
InvenTrust Properties, unlike other non-traded private REITs has not created a “liquidity” event that would have allowed shareholders to withdraw their investment. The REITs are either sold or listed publicly, and the proceeds are distributed to shareholders. InvenTrust, however, has kept its assets in place and their value has decreased.
Issues Related to the Suitability of Non-Traded REITS
They are offered by independent brokers-dealers . These are Direct participation programs. The United States Securities and Exchange Commission defines non-traded REITs as “Reg D” offerings, also known as private placements. Regulation D is a reference that provides exemptions to the usual registration requirements of Section 5 of Securities Act of 1933.
Brokerage firms selling private placements still have a duty of care to do a reasonable analysis on any securities they recommend. FINRA has found significant problems with private placements in the past, including outright fraud as well as sales practices abuse in Regulation D offerings. The firm that recommends the private placement to a client must also conduct an investigation of the issuer and management, as well as the business prospects, assets owned by or acquired by the company, claims made by the company, and intended use of this offering. A firm that fails to investigate a private placement adequately can be in violation of federal securities laws, FINRA Rule 2020 (prohibiting manipulative or fraudulent devices) and Rule 2010 (adherence of just and fair principles of trade). Regulatory Notice 10-22 and its endnotes cite various enforcement actions, cases, and examples. Another sweep by FINRA led to more crackdowns against firms (and individuals), who did not conduct a fair investigation before selling private placings to their customers.
Private Placements Issues FINRA
Broker-dealer firms must also supervise their brokers when it comes to private placements. This includes the investigation of the investment and the recommendation made to customers. Private placements require additional supervision procedures in addition to the usual duties a broker-dealer has with its registered representatives as per FINRA Rule 30010. FINRA Regulatory Note 10-22 reminds us that these additional supervisory procedures should be designed in a way that ensures that a firm’s registered representative: (1) conducts an investigation that is rigorous enough to meet their legal and regulation requirements; (2) completes the analysis required by FINRA Rule 2111, formerly NASD Rule 2310; (3) qualifies their customers to purchase Securities offered pursuant Regulation D; (4) does not violate antifraud provisions in federal securities laws, FINRA Rules or or or FIN0_ or FIN0_ FIN0_ Reg. Each Reg.
Investors Looking to Recover Losses
Some investors can bring a claim in a FINRA arbitration and recover their investment losses. These customer disputes usually involve only paper discovery, no depositions and are faster and more efficient than traditional court litigation.
Haselkorn & Thibaut P.A. Haselkorn & Thibaut, P.A. has filed many (private arbitration) disputes for customers with the Financial Industry Regulatory Association. These disputes were filed on behalf of clients who had suffered investment losses relating issues similar to these matters. These cases are usually handled contingency, with no fees and no recovery.
Haselkorn & Thibaut P.A. has experienced attorneys. As a public service, we offer a free consultation. Call today for more information at 1 888-628-5590 or visit our website and email us from there at www.investmentfraudlawyers.com.
