Did you lose money investing in KBS Growth and Income REIT?
Galvin Legal, PLLC is launching an investigation on behalf of investors who may have suffered losses investing in KBS Growth and Income REIT, a publicly registered non-traded real estate investment trust, at the recommendation of their financial advisor. If you suffered losses investing in the investment, then Galvin Legal, PLLC may be able to help you recover your losses in a Financial Industry Regulatory Authority (“FINRA“) arbitration claim against the broker-dealer and/or registered representative that recommended the investment.
UPDATE 8/13/2020: The board of KBS Growth & Income REIT has terminated the company’s distribution reinvestment plan offering effective as of August 15th in order to pursue a liquidation strategy. The board also terminated the REIT’s currently suspended private placement offering. In November 2018, the board formed a special committee to evaluate various strategic alternatives for the company. The board has decided that it is in the best interests of the company and its stockholders to pursue a liquidation strategy through asset sales. The REIT expects to present a liquidation plan for a vote of the stockholders within the next three to six months, with the goal of completing the liquidation no later than the end of 2022.
UPDATE 12/16/2019: As of September 30, 2019, the board of KBS Growth & Income REIT has approved an estimated net asset value of $8.43 per share of the company’s common stock.
What are Real Estate Investment Trusts (REIT)?
A Real Estate Investment Trust (“REIT”) is a complex investment that is generally only suitable for sophisticated high-net worth investors, and then only in certain circumstances. A REIT is an entity that owns, and may also manage, income producing real estate. REITs pool capital from multiple investors and use it to purchase properties, similar to mutual funds and other pooled investment vehicles.
A Real Estate Investment Trust can be offered in several different forms. A Public Exchange Listed REIT is registered with the U.S. Securities and Exchange Commission (“SEC”) and is publicly traded on a national securities exchange. A Public Non-Listed REIT is registered with the SEC, but does not trade on a major securities exchange. Finally, a Private REIT, also known as a private-placement REIT, is not registered with the SEC and does not trade on a national securities exchange.
KBS Growth and Income REIT Due Diligence Requirement
FINRA requires brokerage firms to conduct due diligence on investments, such as KBS Growth and Income REIT, and to conduct a suitability analysis when recommending securities to a customer that takes into account the customer’s knowledge and experience. FINRA Rule 2111(a) states that “a member or an associated person must have a reasonable basis to believe that a recommended transaction or investment strategy involving a security or securities is suitable for the customer, based on the information obtained through the reasonable diligence of the member or associated person to ascertain the customer’s investment profile. A customer’s investment profile includes, but is not limited to, the customer’s age, other investments, financial situation and needs, tax status, investment objectives, investment experience, investment time horizon, liquidity needs, risk tolerance, and any other information the customer may disclose to the member or associated person in connection with such recommendation.”
Rule 2111 is composed of three main obligations: reasonable-basis suitability, customer-specific suitability, and quantitative suitability. Brokerage firms that fail to conduct adequate due diligence on investments they recommend, such as KBS Growth and Income REIT, or that make unsuitable recommendations can be held responsible for the customer’s losses in a FINRA arbitration claim.
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