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May 22, 2013 at 08:11 AM
Massachusetts Securities Regulator William Galvin ordered five independent broker-dealers Wednesday to pay $8.6 million in restitution to investors and fined them a total of $975,000 for improper sales of nontraded REITs.
The firms involved in the settlement are Ameriprise Financial Services, which will pay $2,592,890 in restitution and a $400,000 fine; Commonwealth Financial Network which will pay $2,074,710 in restitution and a $300,000 fine; Royal Alliance Associates, which will pay $59,000 in restitution and a $25,000 fine; Securities America, which will pay $778,400 in restitution and a $150,000 fine; and Lincoln Financial Advisors Corp., which will pay $503,940 in restitution and a $100,000 fine.
“Our investigation into the sales of REITs, triggered by investor complaints, showed a pattern of impropriety in the sales of these popular but risky investments on the part of independent brokerage firms where supervision has historically been difficult to maintain,” Galvin (right) said in a statement.
In addition to these settlements, Galvin said that LPL Financial had completed the second round of its restitution in connection to similar violations settled with the securities division in December.
With the additional amount of $2,592,150.87 from LPL, total restitution retrieved for investors in Massachusetts this year from improper REIT sales now totals more than $11 million, and fines total more than $1.4 million.
