NEXT Financial Group Fined for Unsuitable Non-Traded REIT Sales

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The Massachusetts Securities Division fined NEXT Financial Group $150,000 for unsuitable non-traded real estate investment trust (REIT) sales and for failing to supervise those REIT transactions, including non-traded REIT sales to investors over 80 years of age, in contravention of firm policy.

The Massachusetts Securities Division's consent order noted that the firm failed to adequately supervise at least 300 REIT purchases that the regulator deemed unsuitable and exceeding NEXT's liquid net worth concentration guidelines.

The reported also noted that several non-traded REIT sales involving investors over 80 years old violated NEXT's written supervisory procedures.

The Financial Industry Regulatory Authority (FINRA), meanwhile, consistently identified REITs, amongst other non-traded alternative investments, as an examination priority relating to suitability, for REIT transactions can be particularly susceptible to suitability or supervisory violations.

For instance, FINRA fined NEXT Financial Group $750,000 for supervisory deficiencies and inadequate oversight in 2017, which itself followed years of discipline levied against NEXT and its brokers for various misconduct from suitability violations to unauthorized transactions, misappropriation, selling away, and conversion.

In 2017, a consulting group study identified NEXT Financial Group as the firm with the seventh-highest rate of pending customer complaints for the number of brokers it employs.

If you have invested with NEXT Financial Group or another firm whose failure to supervise a broker or financial adviser's unsuitable recommendations or sales of non-traded REITs has proven harmful to your investments or interests, please call an experienced FINRA arbitration attorney at The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.

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