Category Archives: Alternative Investment Industry

SEC Filings Part 2: A Closer Look at Some Key Issues


SEC Filings Part 2: A Closer Look at Some Key Issues

November 15, 2017 | by Beth Glavosek | Blue Vault

Börsenkurse als Grafik und Tabelle mit Lupe und Taschenrechner im Panoramaformat

The Securities and Exchange Commission (SEC) aims to make it as easy as possible for investors to fully research companies before they invest in them. You can use the SEC’s EDGAR database to find answers to specific questions and concerns you may have. Here are just a few areas that investors may like to research.

Executive compensation

If you’re curious about how a company’s officers are compensated, the SEC’s Executive Compensation page describes the types of executive compensation and where disclosures are made in SEC filings. According to the SEC, the easiest place to look up information on executive pay is the annual proxy statement.

Insider trading

The SEC explains that insider trading can actually include both legal and illegal conduct. The legal version is when corporate insiders—officers, directors, and employees—buy and sell stock in their own companies. For more information about this type of insider trading and the reports insiders must file, the SEC has prepared an overview of Forms 3, 4 and 5.

Conflicts of interest

Conflicts of interest are required to be disclosed in company prospectuses or prospectus supplements.

Legal proceedings and lawsuits

If there are lawsuits that may materially affect an investment, the SEC requires companies to report such information on its Form 10-K in Item 3 – “Legal Proceedings.”


Companies must disclose bankruptcy filings via Form 8-K. Subsequent 8-Ks may disclose any reorganization plans and the date on which the company intends to emerge from bankruptcy. Investors should look at the reorganization plan for information about whether the common stock of the company may be canceled.

For additional guidance from the SEC on how to read company filings, check out their Beginner’s Guide to Financial Statements.

SEC Filings Part 1: What are All of Those Forms?

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DOL Fiduciary Rule Challenged Again


DOL Fiduciary Rule Challenged Again

January 20, 2017 | by Beth Glavosek | Blue Vault

Legal law concept image gavel  screen display

The Department of Labor’s long-debated Fiduciary Rule is once again being challenged by a group of lawmakers who say that the regulation is burdensome and costly. Congressman Joe Wilson (R-SC) with support from several national organizations has introduced a new bill that pushes for a two-year delay in the rule. During this time, the term ‘fiduciary’ would be reevaluated and the current interpretation of a conflict of interest revisited.

Introduced January 6, 2017, the Protecting American Families’ Retirement Advice Act is currently before the House Ways and Means Committee. Will the new legislation gain traction in advance of the ruling’s April 10, 2017 deadline for applicability?

Apparently, there are mixed reactions in the advisor community. According to CNBC, some continue to oppose the ruling, while others feel that any consumer protection that’s in clients’ best interests is something the industry should embrace. Not only have the terms and wording of the current 1,000+ page ruling involved years of contentious debate and negotiation, many (if not most) financial services companies have already made preparations to comply with it.

According to the DOL, most of the consumer protections provided under the Rule and exemptions must begin by April 10, 2017. However, financial advisors will not have to provide the Best Interest Contract until January 1, 2018.

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In Case You Missed It…

November 25, 2016

On November 9th, Blue Vault released it’s first Nontraded REIT Fee Study. In the weeks leading up to and during the time of release, Blogs were posted to compliment this new study as well some timely commentary on current events.

Here is a look at those posts:

Nontraded REIT Fees

Current Events

Look for future Blue Vault Blog posts in upcoming NewsWires. Blue Vault delivers the most relevant alternative investment industry news, including nontraded REIT, BDC, Closed-End Fund, and private offerings, right to your mailbox.

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Curious about Secondary Markets?

Curious about Secondary Markets?

November 18, 2016 | by Beth Glavosek | Blue Vault

Law gavel with dollars on wooden table background, closeup

One of the aspects of nontraded investments that investors must understand is the issue of illiquidity. That is, the intention of most nontraded programs is that investors will commit their money to the long-term and be able to give up access to their funds temporarily in exchange for a potential pay-off when the investment goes full-cycle.

However, there certainly can be cases in which stockholders wish to sell their shares prior to the conclusion of an investment program. While most nontraded REITs have share redemption programs, these programs may have been suspended due to liquidity issues or restricted to redemption requests filed due to death, disability or other hardships. One alternative to share redemption programs is to sell shares on what’s known as the secondary market.

One outlet that has emerged to offer nontraded REIT shareholders a more competitive market for their shares before a full-cycle event is consummated is the “online auction” website. These sites provide a forum for matching buyers and sellers of nontraded REIT (NTR) shares. In an earlier Insights article, Blue Vault listed more details about this concept and contact information for several of these sites that are available to meet this need.

However, there are some points that advisors and investors may wish to understand before they embark down this path. Here are some common questions and answers.

Q: What should investors know about secondary markets for nontraded products? 

A: There are transaction costs involved, usually as a percentage of the transactions. Also, buyers have to qualify just like they would if they were buying NTR shares from a Broker-Dealer; therefore, minimum net worth, income requirements, and portfolio concentration limits apply.

Q: What is the downside of picking up shares on the secondary markets at a price below current offering price vs. buying the shares from the sponsor? 

A: One downside would be that the shares at the auction sites are offered in “lots” or a specific number of shares. That is, if an investor wants to invest $10,000 or $100,000 in a specific product, there may not be any transactions available because one lot could be for $25,000 worth of shares (approximately) and another is for $11,000 worth of shares, and none of the auctions available match the desired investment amount.

Another downside is the limited availability of NTR shares. Usually, even the most active auction sites have only five or six different NTR share lots available at a time from only five or six NTRs. Those that are most available can be REITs that either have had negative performance over time or are approaching liquidity events, so they are not going to be “long-term” investments. These aspects eliminate most investors from being interested and make these auction markets more open to speculation. Participants are hoping to capture a shorter-term gain by buying low and receiving a capital gain when the liquidity events hopefully materialize.

One of the reasons that more advisors don’t recommend secondary market shares for clients is that these markets do not meet the objectives of long-term investors looking for steady income.

For more information about secondary markets, check out Blue Vault’s Insight articles, exclusively for Subscribers.

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What’s Next for the DOL Fiduciary Rule?

What’s Next for the DOL Fiduciary Rule?

October 11, 2016 | by Beth Glavosek | Blue Vault

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With the results of the U.S. election in, there’s already speculation about the future of the Department of Labor (DOL) fiduciary rule that was finalized last year. Some are defending the rule, while others are hoping it will be repealed or changed.

The rule, expected to take effect in April 2017, now stands in question. “It is extremely likely the DOL fiduciary rule will not go into effect as planned in April 2017,” says Edward Mills, a policy analyst at investment bank FBR Capital Markets. Mr. Mills said Mr. Trump would most likely delay or block the rule through legislation, “most likely through a rider to an appropriations bill.” (source: Wall Street Journal)

Investment News reports that some stakeholders, like the Financial Services Institute, are hopeful for change. “We stand ready to work with [Mr. Trump’s] administration in ensuring Main Street Americans have access to objective and affordable financial advice as they save for a dignified retirement, pay for their children’s education and help care for aging parents,” FSI president and chief executive Dale Brown said in a statement.

However, others have expressed caution. In a statement to Trust Advisor, Pamela Sandy, the 2016 president of the Financial Planning Association says, “A rule is much more difficult to undo than a piece of legislation, so for now nothing changes. While it’s too early to fully understand the intentions of President-Elect Trump and the incoming Congress with regard to the rule, our hope is he will continue the work of the current administration to safeguard the futures of millions of American retirees.”

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