Levin Law, P.A. Investigates Private Banks and Brokerage Firms that Recommended and Sold Commercial Mortgage-Backed Securities and Hospitality-Back Securities to Their Customers

November 10, 2020 Author: Brian Levin
GPB Capital Holdings

Although several market sectors have been recovering in the economy thanks to a combination of stimulus checks, unemployment benefits, and lender forgiveness programs, the recovery for commercial real estate securities, hotel, and hospitality-linked securities is a different story. The Wall Street Journal reported this week how “trouble in the nation’s largest real-estate market could spread pain nationwide.”

Investors whose private bankers, stockbrokers, and financial advisors recommended that the investor place a significant portion of his or her portfolio in securities backed by or linked to commercial mortgage backed securities, hotels, and hospitality companies or indices might have sustained significant losses based on investment-related wrongdoing

Commercial real estate loans for business properties make up a total 22% of many bank’s portfolios, according to Evercore ISI. After the Federal Reserve’s intervention in the credit markets earlier this year, higher-rated securities had a sharp rebound. In contrast, lower-rated commercial mortgage backed securities (CMBS) are not recovering as fast. 

In fact, indexes tracking mortgage-backed bonds with high concentrations in hotels and retail properties showed a struggle to bounce back. Such lower-rated CMBS are expected to have a slower recovery because the products are assembled loans including hotels, retail, and offices. 

Specifically, Moody’s Investors Service singled out hotels as the “hardest hit” commercial property type with about $6.2 billion worth of CMBS on review for downgrade. With a 10.32 % June delinquency rate (30 days past due) according to Trepp, investors and financial advisors need to watch closely the performance of CMBS in their portfolios. 

When an investor sustains significant losses as a result of a financial professional’s unsuitable investment recommendations, he or she may be able to recover such losses through securities litigation or a FINRA arbitration to obtain compensation. Claims included are overconcentration claims, lack of diversification, recommending products that are unsuitable for an investor’s goals and/or risk tolerance, and unsuitable investments claims. In such instances, the losses sustained are not due to market forces but because of stockbroker’s, financial advisor’s, broker-dealer’s, investment advisor’s, or bank’s misconduct. 

 

Contact Levin Law for a Free Case Evaluation

Levin Law continues to investigate brokerage firms who recommended to their customers to invest heavily in CMBS or the hospitality industry, resulting in customer losses. If your investment professional recommended that you invest heavily in stocks, bonds, or structured products linked to CMBS or the hospitality industry, and you suffered losses, contact Levin Law managing partner Brian Levin at (305) 402-9050 or email brian@levinlawpa.com for a free case evaluation. We accept most cases on a contingency-fee basis, meaning you are not responsible for Levin Law’s attorney fees unless money is recovered on your behalf.

About Levin Law

Levin Law is a premier national securities and class action law firm with significant experience.  Brian Levin, Levin Law’s founding attorney, has helped recover approximately $100,000,000 through securities 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.

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