Inland Western Retail Real Estate Trust Inc. isn't listed on any exchange,
and yet brokers promised investors a payout of steady dividends and a
stock price that wouldn't fluctuate with the market, according to
Brokers have been pushing unlisted REITs like these at the expense of
individual investors for some time now. As investors have begun complaining
that brokers didn't fully explain the risks involved with the unlisted
REITs, regulators are beginning to delve more deeply into the marketing
and advisement of these investments by brokers to clients.
According to the June 1 Bloomberg.com article, FINRA began probing the
most active brokers in the market back in March 2009. FINRAs concerns
seem to be tied to whether the brokers: 1) properly weighed the risks
of investment, and 2) then disclosed those risks to their clients.
Elderly clients are disproportionately affected by the nontraded REITs,
according to the article. It has been alleged that brokers are pushing
REITs, like Inland Western Retail Real Estate Trust Inc.'s, on unsuspecting
older clients normally in the market for little-to-no-risk investment
vehicles such as certificates of deposit.