Shepherd, Smith, Edwards & Kantas Investigating REIT Sales By NEXT Financial
HOUSTON, Jan. 08, 2020 (GLOBE NEWSWIRE) -- Lawyers with the firm Shepherd, Smith, Edwards & Kantas, LLP (SSEK Law Firm) are investigating claims involving the sale of non-traded Real Estate Investment Trusts (REITs) by NEXT Financial investment advisors. NEXT Financial (“NEXT”), based in Houston, TX and owned by Atria Wealth Solutions, is an independent brokerage firm that was recently fined $475K by two states stemming from complaints of unsuitability, failure to supervise its agent(s), and sales practice violations. NEXT was fined by the Massachusetts Securities Division for $150K as a result of its investigation into the sale of these unsuitable REITs by an unnamed broker over a 10-year period, along with allegations that “many of the sales exceeded limits as determined by a client’s overall liquid net worth.” The New Hampshire Bureau of Securities Regulation issued a fine of $325K as a result of its investigation “for failing to reasonably supervise the sale of certain alternative investments to a number of clients, including unsuitable sales of non-traded REITs” by NEXT broker Charles Chester Kulch. In addition to the financial penalties, NEXT’s settlements with both regulatory agencies contain agreements by NEXT to “make offers to remediate clients,” which could significantly increase NEXT’s overall financial exposure.
Non-traded REITs are illiquid, alternative, high-commission investment products that are generally considered unsuitable for senior investors and should never comprise more than 20% of an investor’s liquid net worth. Many states have limits on the amount of these products that can be sold to an individual investor and/or can comprise an investor’s portfolio. According to the Massachusetts Securities Division, NEXT had internal guidelines in place related to the allowable concentration of alternative investments such as non-traded REITs in a client’s portfolio, but failed to follow these standards. As a result, investors incurred significant financial losses.
If you were a client of NEXT Financial and are invested in REITs, please contact the law firm of Shepherd, Smith, Edwards & Kantas, LLP today for a free, confidential evaluation of your account(s). We have a team of attorneys, consultants, and staff with over 100 years of combined experience in the securities industry and in securities law that are ready to assist you in recovering your investment losses today.