Hospitality Investors May Be Able to Recover Losses Through FINRA Arbitration

July 12, 2021 Author: Brian Levin
Levin Law PA

Levin Law, P.A. Is Investigating Brokerage Firms That Recommended and Sold Non-Traded REITs Including Hospitality Investors Trust

The national securities and investment fraud firm Levin Law, P.A. is investigating brokerage firms that recommended and sold shares of the non-traded REIT Hospitality Investors Trust, Inc. (“Hospitality”). Hospitality and its operating partnership filed for Chapter 11 Bankruptcy protection on May 19, 2021.

Hospitality investors who suffered financial losses may be able to recover some or all of their investment losses through a FINRA arbitration claim. If your stockbroker, investment advisor, or other financial professional recommended investment in Hospitality or another non-traded REIT resulting in losses, contact our office at (305) 402-9050 or via email at contact@levinlawpa.com for a free case evaluation. 

Non-traded REITs are Illiquid Investments

The U.S. Securities and Exchange Commission (SEC) issued a warning to investors about the risks associated with investing in non-traded real estate investment trusts (REITs). Non-traded REITs, while registered with the SEC, are not listed on a stock exchange or publicly traded. They are illiquid investments that generally “cannot be sold readily in the market.” 

Many brokers sell investors on non-traded REITs stating that they are safe since they are not correlated to the market. This, however, means that an investor would have no idea about the true value of a share. There is no market price for a non-traded REIT and thus no way to get a fair valuation.

Non-traded REITs Have High Commissions and High Fees 

Brokers and investment advisers may be willing to recommend investment in non-traded REITs because they generally receive higher commissions. Brokers who sold non-traded REITs such as Hospitality reportedly received commissions as high as 12%.

According to the SEC, total fees for non-traded REITs were as much as 15% of the offering price. These high commissions and fees lower the value of the investment and the potential for a favorable return. 

Filing a FINRA Arbitration Claim

Since Hospitality has filed for Chapter 11 bankruptcy protection, it is unlikely that harmed investors will be able to recover losses through a direct lawsuit against the company. Hospitality investors who lost money due to their investment might be entitled to compensation through a FINRA arbitration claim.

FINRA arbitration claims are filed against a brokerage firm for their representative’s negligence or misconduct, resulting in investor losses. Claims may be brought against a broker-dealer based on a failure to disclose risks, material misrepresentations and omissions, negligence, conflicts of interests, unsuitability, and the firm’s failure to supervise.

Contact Levin Law for a Free Case Evaluation

If you suffered losses as a result of investing in Hospitality Investors Trust or another non-traded REIT, contact Levin Law, P.A. for a free case evaluation. Managing partner Brian Levin has recovered millions of dollars on behalf of harmed investors. Call Levin Law at (305) 402-9050 or email Attorney Levin directly at contact@levinlawpa.com

Most cases are accepted on a contingency fee basis, meaning that clients are not responsible for Levin Law attorneys’ fees unless money is recovered on their behalf.

About Levin Law

Levin Law is a premier national securities and class action law firm. Brian Levin, Levin Law’s managing attorney, has obtained settlements and recoveries in excess of $100,000,000 in assets through arbitration and litigation for individual and institutional investors throughout the country and the rest of the world. Levin Law represents retirees, individual investors, high-net-worth investors, ultra-high-net-worth investors, institutions, family offices, trusts, publicly held companies, and others.