Massachusetts securities regulators sued LPL Financial (LPLA) on Wednesday over sales of non-traded REITS from 2006 to 2009.
Of nearly 600 transactions, the Enforcement Division in the Massachusetts Securities Division filed a complaint that said it found close to 570 trades in violation of prospectus rules, and at least 77 trades worth about $4.7 million were made in violation of state investment-concentration requirements.
The non-traded REIT sales in question for the LPL-affiliated reps totaled about $26.5 million and brought in $1.8 million of gross commissions. According to the Massachusetts regulators, “LPL received high commissions starting at 6%” of sales.
There are currently 13,170 FAs affiliated with LPL, which is led by Mark Casady (right).
“We believe the claims included in the complaint are substantially overstated. LPL Financial takes protection of investors’ interests seriously,” the company said in a statement. “We have always endeavored to promote a strong culture of compliance and continue to do so.”
The Massachusetts regulator says it received complaints from multiple investors who had bought shares of Inland American Real Estate Trust and other non-traded REITs through financial advisors affiliated with LPL Financial and offered for sale on the LPL platform.
The other non-traded REITS were Cole Credit Property Trust II, III and 1031 Exchange; Wells Real Estate Investment Trust II, W. P. Carey Corporate Property Associates 17 and Dividend Capital Total Realty.