After American Realty Capital New York City Real Estate Investment Trust Went Public, Share Price Plunged
If you are a retail investor whose broker recommended that you invest in American Realty Capital (ARC) New York City Real Estate Investment Trust (REIT), you may have grounds for an unsuitable investment recommendation claim.
ARC NYC REIT is a risky, speculative investment and definitely shouldn’t have been marketed to inexperienced investors, conservative investors, seniors, or retirees. Although initially a non-traded real estate investment trust (non-traded REIT), and also an illiquid investment, ARC NYC REIT went public on the New York Stock Exchange (NYSE) in August.
Its share price fell on its very first day. With an original IPO price offering of $25/share, after going public the non-traded REIT’s board gave its approval for a 2.43 to 1 reverse split. This caused the share price to go down. Unfortunately, for many investors, this resulted in losses reportedly as high as 80%.
At Shepherd Smith Edwards and Kantas (SSEK Law Firm at investorlawyers.com), our non-traded REIT fraud lawyers represent investors who have lost money in real estate investment trusts because of the negligence or fraudulent actions of their brokers and broker-dealers.
Contact SSEK Law Firm today if you lost money from investing in ARC NYC REIT.
Brokers Owe Investors a Fiduciary Duty
Brokers and their firms marketed American Realty Capital (ARC) New York City REIT to investors starting in 2013. Many of these customers were retail investors and should never have been recommended this type of REIT, which is exempt from disclosure requirements and illiquid, making it hard to resell without losing money.
As a matter of fact, this type of complex risky investment is generally considered only suitable for accredited investors that meet certain requirements, including a high-income threshold.
Yet, after becoming incorporated as a Maryland REIT in 2013 and registering with the SEC, ARC NYC REIT was allowed to sell securities to the public, including inexperienced investors. The purchases were made through the IPO at the recommendation of an investment advisor or broker.
Stockbrokers promoted this real estate investment trust as quality real estate within New York City to many retail investors, who were allegedly led to believe that they could earn 10% yearly returns. However, one reason why brokers may have recommended ARC NYC REIT to customers was the high commissions offered.
It is a broker’s duty to only make investment recommendations that are suitable for each customer while apprising them of all the risks involved. It is a broker-dealer’s responsibility to adequately supervise its registered representatives and their transactions, as well as the accounts of their customers.
When unsuitable investment recommendations lead to significant losses, an investor may be able to file a claim for damages through Financial Industry Regulatory Authority (FINRA) arbitration.
ARC NYC REIT Lawyers
At SSEK Law Firm, our skilled investment fraud lawyers have successfully gone after the largest firms on Wall Street on behalf of investors so that they could recover the REIT losses they are owed. Contact us today for your free, no-obligation case consultation with an experienced ARC NYC REIT attorney.