Massachusetts Securities Regulator Targets SII Investments with Enforcement Action
On September 20, 2017, the Enforcement Section of the Massachusetts Securities Division filed a massive complaint against SII Investments, Inc.
The complaint alleges that from 2011 to 2017, SII Investments engaged in “dishonest and unethical conduct and failed to supervise its agents by allowing systemic inflation of its clients liquid net worth while maintaining contradictory and unclear rules related to the purchase of non-traded real estate investment trusts (REITS).”
Non-Traded REITS are companies which own and manage income producing properties or are involved in real estate financing and are often investments that are entirely illiquid. As a result of the complicated characteristics of REIT investments, they have become a “widely used and widely misunderstood investment vehicle” that “typically pay high sales commissions and offer fees that range from 15 to 18 percent.”
The misconduct that is alleged in the enforcement complaint is predicated on the allegation that SII Investments increased the purported liquid net worth of its clients in order to get around the Massachusetts regulation – and SII’s own internal policies and procedures – which limit the amount of a client’s investment to no more than 10% of a client’s liquid net worth in any one sponsor’s REIT with a maximum of no more than 20% of liquid net worth allowed across all such REIT products.
A copy of the complaint filed by Massachusetts against SII Investments can be found here SII-Administrative-Complaint-E-2016-0128.
SII Investments, Inc. is an independent broker-dealer which has an extensive history of prior regulatory actions and customer-initiated arbitration proceedings having been filed against it.
If you are an individual or institutional investor who has any concerns about your investments with SII Investments, please contact us for a no-cost and no-obligation evaluation of your specific facts and circumstances. You may have a viable claim for recovery of your investment losses by filing an individual securities arbitration claim with the Financial Industry Regulatory Authority (FINRA).