Regulators Fine Atlanta-Based Wells Investment Securities for Misleading Investors

 

The Financial Industry Regulatory Authority (FINRA) has fined Wells Investment Securities, Inc. $300,000 for misleading investors about Wells Timberland REIT, Inc., a non-traded Real Estate Investment Trust (REIT). FINRA found that Wells Investment Securities used misleading marketing materials to effect sales of the Wells Timberland REIT.

Wells Timberland REIT invested in timber-producing land. Wells Investment Securities was the dealer-manager and wholesaler for its public offering.

According to FINRA, from May 2007 through September 2009, Wells Investment Securities reviewed, approved and distributed misleading, unwarranted or exaggerated statements contained in 116 advertising and sales materials. Most of the advertising and sales materials indicated that Wells Timberland was a REIT when it was not, or failed to explain the significance of its not having qualified as a REIT at that time. The significance had to do with tax benefits that were not available as long as Wells Timberland was not a REIT.

The advertisements and sales materials also contained material misrepresentations about Wells Timberland’s portfolio diversification, as well as its ability to make distributions and redemptions.

“By approving and distributing marketing materials with ambiguous and equivocal statements, Wells misled investors into thinking Wells Timberland was a REIT at a time when it was not a REIT,” said Brad Bennett, FINRA Executive Vice President and Chief of Enforcement, adding: “Firms need to be mindful that investors rely on marketing materials to disclose truthful, accurate and up-to-date information to help inform their investment decisions.”

Page Perry is an Atlanta-based law firm with over 150 years collective experience representing investors in securities-related litigation and arbitration. While past results are not indicative of future success, Page Perry’s attorneys have recovered over $1,000,000 for clients on more than 45 occasions. Page Perry’s attorneys have extensive experience in representing investors in cases involving non-traded REITs. The firm is currently investigating various Wells REITs For further information, please contact us.