Naples, FL., — Vernon Litigation Group, based in Naples, Florida is representing investors that have suffered losses in the Parking REIT (formerly known as the MVP REIT). The Parking REIT is a speculative investment with high commissions. In addition, the investment is illiquid, which means that shares are not sold on any publicly traded market. Investors purchased shares in the REIT at $25 per share. The REIT is now valued at $11.75 per share, representing a loss of 57% of investment principal.
REITs (Also known as Non-Conventional Investments) such as the Parking REIT are subject to strict obligations for sale by Notice to Members 03-71. The Notice reminds brokerage firms that:
Given the complex nature of NCIs [Non-Conventional Investments aka Alternative Investments] and the potential for customer harm or confusion, members are cautioned to ensure that their sales conduct procedures fully and accurately address any of the special circumstances presented by the sale of NCIs. Additionally, NASD is concerned that investors, particularly retail investors, may not fully understand the risks associated with these products.
The notice also requires members offering Non-Conventional Investments such as REITs and other alternatives of their obligations to: (1) conduct adequate due diligence to understand the features of the product; (2) perform a reasonable-basis suitability analysis; (3) perform customer-specific suitability analysis in connection with any recommended transactions; (4) provide a balanced disclosure of both the risks and rewards associated with the particular product, especially when selling to retail investors; (5) implement appropriate internal controls; and (6) train registered persons regarding the features, risks, and suitability of these products.
Our clients have suffered damages because firms have failed to follow these industry requirements. One of our securities attorneys will happily provide you with a free overview of any potential claims you may have regarding your broker’s recommendations in the Parking REIT or any other alternative investment.