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One Bad Apple Doesn’t Always Spoil the Whole Bunch

October 23, 2012

Nontraded REITs continue to get a bad reputation as a result of fines and sanctions like the one just handed down by FINRA against David Lerner Associates.  On the whole however, sponsors of nontraded REITs and the broker/dealers that distribute them are among the most highly regulated groups operating in the securities industry today.

For example, the disclosure in the FINRA press release that states David Lerner Associates is required to file all advertisements and sales literature with FINRA at least 10 days prior to use is not unusual, but rather, part of a standard operating procedure for all nontraded REIT sponsors.  In addition to filing sales literature with FINRA, nontraded REITs are also required to file communications to financial intermediaries and investors with the SEC and certain state regulatory agencies prior to use.  This process gives the SEC and the state regulators the opportunity to provide comments, scrutinize word choices and verify data sources before the sales literature is ever distributed to the public.

As an industry observer, we feel it is important to address misperceptions, demystify the industry and provide ongoing education about the nontraded REIT market.  To that end, the communications we provide are regularly obtained through SEC filings and other public sources in an effort to continuously foster transparency.

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John E. Moriarty, ChFC
December 2015
February 3, 2016

I have been in the financial services industry for 20 years and our firm provides an education platform that gets clients to “think differently” about their financial picture.  For many years we have communicated to clients the need to diversify their portfolios using alternative asset classes and more specifically, private non-traded investments.  Due diligence on these types of financial vehicles is essential and when I learned about Blue Vault in 2010, our firm immediately began using their material as a tool to build confidence in the minds of our advisors on which alternatives to recommend to clients.  I am impressed with the way Blue Vault continues to add value to their subscribers and I view their publication as a tremendous resource in today’s complex world.