Friday, December 2, 2011

FINRA Fines Wells Investment Securities $300,000 for Misleading Marketing Tools

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FINRA announced that it has fined Wells Investment Securities, Inc. $300,000 for using misleading marketing materials in the sale of Wells Timberland REIT, Inc., a non-traded Real Estate Investment Trust (REIT). As the wholesaler, Wells Investment Securities had the responsibility to review, approve and distribute the marketing materials. From May 2007 to September 2009 the 116 materials that were distributed contained misleading, unwarranted or exaggerated statements. The advertisements at issue did not make it clear to potential investors who might be seeking such favorable tax treatment, that the investment at issue was not yet a REIT. Therefore, it would not be able to offer the desired tax benefits at the time the ads were being used. The investigation has also found that Wells supervisory procedures failed to ensure the security of customer and proprietary information that was stored on laptops.

Brad Bennett, FINRA Executive Vice President and Chief of Enforcement, said, "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. 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."


FINRA Fines Wells Investment Securitites $300,000 for Use of Misleading Marketing Materials for REIT Offering



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