LPL Financial LLC will pay the state of Texas $110,855 and offer remediation to Texas investors as part of a multi-state settlement regarding LPL’s sales of non-traded Real Estate Investment Trusts (“REITs”).
The Texas State Securities Board (“Texas SSB”) found that “During the time period from January 1, 2008 through December 31, 2013, LPL processed over 2,000 transactions in various jurisdictions that were sold in excess of the REIT’s prospectus standards, various state concentration limits or LPL’s Alternative Investment Guidelines,” as stated in the Consent Decree. The Texas SSB concluded that “LPL failed to implement an adequate supervisory system that was reasonably designed to achieve compliance with applicable securities laws, regarding its sale, through Texas representatives, of non-traded REITs.”
As noted in the Consent Decree, “Non-traded REITs generally carry significant investor risk in that they present liquidity risk and often have lengthy holding periods, restricted redemption options, and variable withdrawal periods determined by issuer specific programs.”
As part of the settlement, LPL will offer to remediate losses for all non-traded REITs that were sold by LPL to its Texas clients from January 1, 2008 through December 31, 2013.
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