Massachusetts Secretary of State William F. Galvin said Wednesday that five independent brokerage firms that sold non-traded REITs improperly have agreed to offer investors an additional $10.7 million after a review of their procedures in the sales of other REITs to Massachusetts investors.
After the firms paid fines and agreed to make restitution in May, they reviewed the sales of all other real estate investment trusts, or REITs, they offered, which resulted in the restitution just announced, Galvin’s office said.
The five firms and their second round of restitutions are: Securities America, $7.6 million; Ameriprise, $1.6 million; Lincoln Financial Advisors Corp., $840,873; Commonwealth Financial Network, $533,500; and Royal Alliance Associates, $125,000, Galvin’s office said.
This round of restitution brings the total returned to investors as the result of the Massachusetts Securities Division’s investigation of sales of these investment trusts that own or manage real estate or do real estate financing to $21.6 million. (The Securities Division is part of Galvin’s office.)
“These investments are popular, but risky,” Galvin said in a statement. “Our investigation showed widespread problems with adherence to the firms’ own policies as well as the state rule that an investor’s purchase of REITs cannot be more than 10 percent of that person’s liquid net worth.”