The White Law Group is investigating potential FINRA lawsuits involving broker dealers who may have unsuitably recommended non-traded REITs such as NorthStar Healthcare Income, Inc. to investors.
Unfortunately for investors it appears that many financial advisors/brokerage firms that sold non-traded REITs such as NorthStar Healthcare Income Inc., may have understated or misrepresented the risks and liquidity problems.
The Net Asset Value ( NAV) continues to decline as does the secondary market sales price. As recently as September 24, shares of NorthStar Healthcare Income sold for just $1.20 per share, according to Central Trade and Transfer. The original offering price for the REIT was $10.00 per share.
This comes after the REIT suspended its SRP in October 2018 and suspended distributions in February 2019. Investors are questioning if and when they will be able to get their money back.
Risks of Non-Traded REITs
Non-traded real estate investment trusts (REITs) are complex and inherently risky products. Unfortunately for investors, many REITs have taken a hit due to the Covid-19 global pandemic, and some have 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.
Filing a Complaint Against your Brokerage Firm
Prior to making recommendations to an individual investor, brokerage firms are required by the Financial Industry Regulatory Authority (FINRA) to disclose all the risks of an investment. 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.
High commissions could be a motivating factor for unscrupulous financial advisors to sell non-traded REITs regardless of whether the investment is in line with the client’s investment objectives and profile. Moreover, the total commissions and expenses make it difficult for the REIT to perform in line with the market.
Free Consultation with a Securities Attorney
If you are concerned about your investment in NorthStar Healthcare Income Inc., 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.
The White Law Group is a national securities fraud, securities arbitration, and investor protection law firm with offices in Chicago, Illinois and Franklin, Tennessee.
For more information on The White Law Group, visit https://www.whitesecuritieslaw.com.