Many Florida investors have seen their financial portfolios decline in recent years. Although investors in mutual funds may have fared slightly better than individual stockholders, not even the diversification of mutual fund holdings may have completely insulated some investors from across-the-board falling stock prices.

In response to this bear market, some investors have turned to government bonds and other low risk securities. Other investors, however, looked for higher-yield options. Unfortunately, a recent article suggests that some financial advisers may have taken advantage of the financial recession by promoting complex, higher risk products to desperate investors.

Private loans to new companies and loans to bundled commercial real estate properties — typically referred to as real estate investment trusts, or REITs — are two examples of speculative investment vehicles that many investors would otherwise have avoided before the recession. REITS can be particularly problematic, as some are only traded privately, instead of on public exchanges. According to one source, trading activity of private REITs increased from $43 billion in 2009 to $65 billion last year.

Regulators at both the state and federal level are now seeing allegations of securities fraud brought against these types of investments. An official at the Financial Industry Regulatory Authority also confirmed the rising number of legal disputes involving high-risk, alternative financial products, including REITs, private placements and business development companies. In fact, FINRA has issued several fines to companies that promote nontraded REITs.

For investors who were given misleading information or received other misrepresentations from their broker or financial adviser, there may be legal remedies available. A securities fraud attorney may be able to help such investors recoup some of their losses by bringing a successful lawsuit.

Source: New York Times, “Speculative Bets Prove Risky as Savers Chase Payoff,” Nathaniel Popper, Feb. 10, 2013

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