TAG | Wells Investment Securities Inc.
FINRA Preparing to Sanction Wells for Failing to Meet Advertising Standards and Keeping Information Safe
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In an April 6, 2011, article for InvestmentNews.com, Bruce Kelly writes that the Financial Industry Regulatory Authority, or FINRA, is prepared to sanction the broker-dealer arm of one of the largest sponsors of non-traded real estate investment trusts for allegedly failing to meet standards for advertising and keeping client information safe.
The Securities and Exchange Commission (SEC) in a filing last Friday, Wells Timberland REIT Inc. said that Finra in March notified its broker-dealer manager, Wells Investment Securities Inc., about its preliminary decision to recommend a disciplinary action against the broker-dealer.
Leo Wells, its founder and chairman, is well known in the independent broker-dealer industry. Wells Real Estate Funds Inc. is one of the largest sponsors of investments in the non-traded REIT industry, with $11 billion in assets and 250,000 investors.
Finra notified Wells Investment Securities in August and said that it had made a preliminary decision to discipline the firm, according to the filing.
According to the InvestmentNews.com article, in its SEC filing, Wells Investment Securities said it “intends to vigorously defend these charges.”
The Wells Timberland REIT had $360 million in assets at the end of last year.
Industry lawyers said there was no way to determine the amount of a likely fine without knowing more details about the matter.
In Kelly’s article, he states that Wells’ REITs are extremely popular with independent broker-dealers, and it has as many as 200 selling agreements with such firms. The Wells Core Office Income REIT Inc. is another product sold by independent broker-dealers.
Nancy Condon, a Finra spokeswoman, had no comment about the matter, and a spokesman for Wells, Terrell McCollum, said he could not comment beyond the contents of the SEC filing.
Kelly goes on to say that Wells has been down this path before. In October 2003, Finra’s precursor, NASD, sanctioned Wells Investment Securities for improperly rewarding broker-dealer reps who sold the company’s REITs. Those rewards included lavish entertainment and travel perquisites. At the time, the regulator also censured Mr. Wells and suspended him from acting in a principal capacity for one year.
If you feel you have been a victim of these alleged fraudulent schemes of Leo Wells and the Wells’ REITs, call a Securities Arbitration Lawyer for a free consultation on how to recover your losses. To speak with an attorney, call 888-760-6552, or visit www.stockmarketlawsuit.com. Soreide Law Group, PLLC., representing investors nationwide before FINRA the Financial Industry Regulatory Authority.
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