Massachusetts Secretary of the Commonwealth William Galvin has ordered SII Investments Inc. to pay the money back to clients who bought non-traded real estate investment trusts (REITs) from the independent broker-dealer.
Last year, Galvin’s office charged SII Investments with failure to supervise sales of non-traded REITs and dishonest or unethical conduct. Under the order, the broker-dealer will offer clients their money back. As part of the settlement, SII will also pay a $50,000 fine.
Many non-traded REITs paid large commissions, causing some brokers to recommend the investment regardless of whether the investments were suitable for the investors. A broker placing their own financial interest ahead of their clients’ best interests is one of the more common forms of broker misconduct that we see.
SII Investments Policies Resulted in Thousands of Sales
According to Massachusetts’ regulator, SII’s policies and procedures allowed brokers to count clients' annuities as liquid rather than non-liquid assets. This allowed SII brokers to miscalculate a customer’s liquid net worth in order to sell thousands of dollars of high-commission non-traded REITs to clients.
Galvin Goes After REIT Sales
In recent years, Galvin’s office has targeted brokers’ and brokerage firms’ abusive sales of REITs. In 2013, five broker-dealers agreed to pay about $17 million in restitution to clients who sold non-traded REITs, dating from 2005 to the present. In the same year, LPL also was ordered to pay $2 million in restitution to clients who bought non-traded REITs.
SII Investments Purchased by LPL
Last year, LPL bought SII Investments as part of its National Planning Holdings purchase, a network of four broker-dealers owned by insurance company Jackson National.
The deal was structured as an asset purchase, meaning LPL acquired the right to recruit advisers from the NPH broker-dealer network but any historical liabilities of those broker-dealers remained the responsibility of NPH.
Have You Lost Money as a result of SII Investments?
If you lost money investing with SII Investments or think you may be the victim of stockbroker misconduct, contact an experienced investment fraud attorney today.
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