SEC Issues Investor Bulletin on Non-Traded REITs

Stockbroker Law - Wednesday, September 30, 2015
SEC Issues Investor Bulletin on Non-Traded REITs

On August 31, 2015, the SEC Office of Investor Education and Advocacy issued a bulletin to educate investors about the risks of non-traded REITs. The bulletin noted many of the downsides associated with non-traded REIT’s for small investors, including the following:   


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FINRA Issues Bond Liquidity Investor Alert

Stockbroker Law - Wednesday, September 23, 2015
FINRA Issues Bond Liquidity Investor Alert

The past several years have seen a volatile bond market in which many investors have sustained unanticipated bond principal valuation losses. While a bond is typically designed to afford investors the full value of their original investment at the time of their maturity, volatility in the bond in the financial markets has seen many investors unable to liquidate their bonds prior to maturity without sustaining significant losses. Typically, when interest rates rise, bond prices fall. This is something that can cause a sellout in the bond market, which depresses bond prices and makes it more difficult to sell a bond - especially bonds with a longer maturity date.  Other factors, such as credit scores, can cause the same problem. 


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Investors Sustain Catastrophic REIT Losses

Stockbroker Law - Thursday, September 17, 2015
Investors Sustain Catastrophic REIT Losses

The past ten years has seen an explosion of brokerage sales activity largely involving non-traded REIT investments. REIT’s are Real Estate Investment Trusts which are not publicly traded in the conventional securities markets and exchanges and thus they can be illiquid and an inappropriate investment for any investors. Popular REIT investments include:  


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FINRA Trade Reporting and Compliance Engine (TRACE)

Stockbroker Law - Wednesday, September 09, 2015
FINRA Trade Reporting and Compliance Engine (TRACE)

The Financial Industry Regulatory Authority (FINRA) has developed a system for the mandatory reporting of most bond transactions in the United States. All broker/dealers who are members of FINRA are required to report transactions and corporate bonds to the TRACE System under rules approved by the SEC. These rules were designed to bring transparency to bond transactions and to prevent overpricing, excessive markups and self dealing whereby firms selling bonds to customers might otherwise reap improper and undisclosed trading profits by way of sales of bonds to customers. 


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