Erez Law is currently investigating brokers across the country who recommended their clients invest in American Realty Capital (ARC) New York City Real Estate Investment Trust (REIT), which is now known as New York City REIT.
According to public records, brokers at brokerage firms across the country recommended their retail clients invest in American Realty Capital (ARC) New York City REIT, between 2013 and 2017. The New York City REIT was promoted as, a “high-quality commercial real estate located within the five boroughs of New York City, particularly Manhattan.” It is alleged that brokers led investors to believe that they would earn 10% each year.
The REIT was originally not traded on a publicly-traded platform (meaning it was a non-traded REIT), which made it exempt from disclosure requirements that publicly-traded investments must follow. It is also a non-liquid investment, making it even riskier for retirees who needed access to their money. Additionally, because these illiquid REITs were not sold in the marketplace, investors looking to have access to their money or looking to sell their investments often had to sell their shares at significant losses.
Due to the fact that investors would not receive standard disclosures, these investments should only have been sold to accredited investors with high incomes. These investments were not suitable for retirees, who often seek returns and to supplement their income. These alternative investments were intended for sophisticated, wealthy investors.
American Realty Capital (ARC) New York City REIT was originally offered with an initial public offering (IPO) price of $25 per share. American Realty Capital (ARC) New York City REIT ceased distributions. Then in August 2020, American Realty Capital (ARC) New York City REIT went public as New York City REIT (stock ticker NYC). The board of the New York City REIT then approved a 2.43 to 1 reverse split; the price of the New York City REIT crashed and many investors saw losses upwards of 80%. New York City REIT currently trades at $9.81 as of November 20, 2020.
It is alleged that brokers recommended their clients invest in American Realty Capital (ARC) New York City REIT and other non-traded REITs due to the high commissions earned.
Pursuant to FINRA Rules, member firms are responsible for supervising a broker’s activities during the time the broker is registered with the firm. Therefore, brokerage firms across the country may be liable for investment or other losses suffered by their customers.
Erez Law represents investors in the United States for claims against brokers and brokerage firms for wrongdoing. If and have experienced investment losses, please call us at 888-840-1571 or complete our contact form for a free consultation. Erez Law is a nationally recognized law firm representing individuals, trusts, corporations and institutions in claims against brokerage firms, banks and insurance companies on a contingency fee basis.