William Galvin, the secretary of the Commonwealth of Massachusetts, today announced settlements with five leading independent broker/dealers to make $8.6 million in restitution to investors and pay fines totaling $975,000 for the sales of nontraded real estate investment trusts (REITs).
These five firms are: Ameriprise Financial Services Inc., with $2.6 million in restitution and a fine of $400,000; Commonwealth Financial Network, which will pay $2.1 million in restitution and a $300,000 fine; Royal Alliance Associates Inc., which will pay $59,000 in restitution and a $25,000; Securities America Inc., paying $778,000 in restitution and a $150,000 fine; and Lincoln Financial Advisors Corp., paying $504,000 in restitution and a $100,000 fine.
“Our investigation into the sales of REITs, triggered by investor complaints, showed a pattern of impropriety on the sales of these popular but risky investments on the part of independent brokerage firms where supervision has historically been difficult to monitor,” Mr. Galvin said in a statement.
This is the Massachusetts Securities Division's second settlement this year over the sale of nontraded REITs. In February, Mr. Galvin reached a settlement with LPL Financial LLC to pay at least $2 million in restitution and $500,000 in fines over the sale of nontraded REITs.
Mr. Galvin has garnered more than $11 million total this year, in restitution for Massachusetts investors and levied $1.4 million in fines from independent broker-dealers, many that sell nontraded REITS.
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