Non-Listed REIT Earns A $300,000 Fine For Exaggerating Its Liquidity And Diversification


University endowments like Yale made woodland famous as an "asset class" and launched quite a few woodland REITs.


But while ideal for institutional investors with theoretically infinite time to make money off their acreage -- or find a qualified buyer -- these vehicles are rarely liquid.


That makes them questionable for retail investors who may need the cash within a reasonable span of time.


FINRA just fined one such REIT from Wells Investment Securities $300,000 for "misleading, unwarranted, or exaggerated statements" about its liquidity and filing status.


The regulators warned that the Wells REIT misled investors about how "diversified" the portfolio -- trees -- really was and how easy it would be to redeem shares if investors wanted out.


FINRA is taking a tougher line on non-listed REITS lately, perhaps in an effort to clamp down on the next iteration of the mortgage-backed "private offering" boom that wrecked so many brokerage firms and retail portfolios over the last few years.


If so, it would be nice if they got ahead of the curve and looked for dangerous securities that are just now being created. Wells' REIT seems to have done most of its business between 2007 and 2009.


This Website Is For Financial Professionals Only

Let’s Make This Easy


We're the right news and professional education solution for you if you’re a fiduciary who:

--  holds a CFP®, CIMA®, CPA, CPA/PFS, CFA or other designation requiring CE annually  

--  likes the work of Fritz Meyer, Craig Israelsen, Bob Keebler or Andy Gluck

--  relies on economic fundamentals

--  broadly diversifies a core of client portfolios in low-expense funds

--  strategically invests based on MPT

--  offers tax and financial planning advice

--  values thought leadership when bad news breaks 


A4A courses, accredited by the CFP Board, IWI, and NASBA, power a special brand of independent financial advice. We also leverage the Web to benefit of consumers as well as fiduciaries enrolled in our classes.