Tustin, CA | January 22, 2026
California-based financial advisor Leticia Hewko (CRD# 6211451) is defending herself against a pending FINRA arbitration filed in June 2025, alleging that she recommended unsuitable non-traded real estate investment trusts (REITs) to clients who were unaware of the risks involved. The complaint, filed on June 30, 2025, seeks damages between $100,000 and $500,000 and raises fundamental questions about whether Hewko adequately disclosed the illiquidity, fees, and risks associated with these complex real estate securities.
According to the Statement of Claim filed with FINRA (Case #25-01341), the claimants assert that their investments in non-traded REITs were not suitable for their financial circumstances and that they were not properly informed about the risks these investments carry. Hewko, who has been registered with Independent Financial Group, LLC since February 2016 and operates from Tustin, California, maintains that the clients had “a well-diversified portfolio that included various investment types and allocations” and plans to defend the claim “as without merit and for failure to state a claim on which relief can be granted.”
This arbitration represents a common but serious dispute in the securities industry: whether brokers adequately explain the unique characteristics and risks of non-traded REITs—investments that often pay attractive commissions to selling brokers but can trap investors in illiquid positions for years with limited ability to access their capital.
BrokerCheck Snapshot
Name: Leticia Hewko
CRD #: 6211451
Current Firm: Independent Financial Group, LLC (since February 2016)
Location: Tustin, CA
Years in Industry: 10
Number of Disclosures: 2 (1 Customer Dispute – Pending, 1 Tax Lien)
The Pending FINRA Arbitration: Non-Traded REIT Suitability Claims
The arbitration filed against Hewko on June 30, 2025, alleges two core violations that frequently appear in non-traded REIT cases: lack of suitability and inadequate risk disclosure.
FINRA Case Number: 25-01341
Date Filed: June 30, 2025
Date Complaint Received by Firm: July 7, 2025
Product Type: Non-Traded REITs
Alleged Damages: Between $100,000 and $500,000
Status: Pending
Allegations: Clients claim investments were not suitable and they were unaware of the risks
The Statement of Claim alleges that the claimants’ investments in non-traded REITs were unsuitable for their financial situation and investment objectives. Additionally, the claimants assert they were not adequately informed about the risks associated with these investments—a particularly serious allegation given that non-traded REITs carry unique risks that distinguish them from publicly traded securities.
Hewko’s Defense:
In her statement responding to the allegations, Hewko asserts: “Preliminary review does not show evidence to support the claims made. Claimants had a well-diversified portfolio that included various investment types and allocations. The claim will be defended as without merit and for failure to state a claim on which relief can be granted.”
This defense emphasizes diversification, suggesting that the non-traded REITs represented only one component of a broader portfolio containing multiple investment types. However, this defense raises important questions that will likely be central to the arbitration:
- What percentage of the clients’ liquid net worth was allocated to illiquid non-traded REITs?
- Were the clients adequately informed that non-traded REITs cannot be easily sold?
- Did the clients understand the fee structures and how much of their investment went to commissions and fees rather than actual real estate equity?
- Were alternative, more liquid REIT investments (such as publicly traded REITs) discussed and compared?
- Did the clients’ age, income needs, and time horizon make illiquid real estate securities appropriate?
The fact that a portfolio contains “various investment types” doesn’t necessarily mean each individual investment is suitable. A retiree with limited income, for example, might have an unsuitable concentration in illiquid non-traded REITs even if the portfolio also contains stocks, bonds, and mutual funds.
Understanding Non-Traded REITs: What Makes Them Different
To appreciate the suitability issues in this case, it’s essential to understand what non-traded REITs are and how they differ from publicly traded real estate investments.
What Are Non-Traded REITs?
Non-traded REITs are real estate investment trusts that are not listed on public stock exchanges like the New York Stock Exchange or NASDAQ. While they must register with the Securities and Exchange Commission and comply with securities laws, they do not trade on secondary markets, making them fundamentally different from publicly traded REITs.
Non-traded REITs pool investor money to purchase commercial real estate properties—typically office buildings, apartment complexes, retail centers, industrial facilities, or healthcare properties. They’re structured to qualify as REITs under the Internal Revenue Code, requiring them to distribute at least 90% of taxable income to shareholders as dividends.
Key Characteristics That Distinguish Non-Traded REITs:
Illiquidity: This is the defining characteristic that creates the most significant risk. Non-traded REIT shares cannot be sold on a stock exchange. Investors who need to access their capital typically face three options, all problematic:
- Wait for the REIT to “go liquid” through an eventual public listing, merger, or portfolio liquidation, which typically takes 7-10 years or longer
- Participate in limited share repurchase programs that the REIT may offer, usually with strict caps on how many shares can be redeemed quarterly and often at discounted prices
- Sell on a secondary market at a substantial discount (often 20-50% below the stated share price) to buyers willing to take on illiquid assets
For investors who experience health emergencies, need assisted living care, or face other liquidity needs, this illiquidity can be devastating.
High Upfront Fees: Non-traded REITs typically charge substantial upfront fees that immediately reduce the investor’s equity position. Common fees include:
- Selling commissions: 6-10% paid to the broker
- Dealer-manager fees: 1-3% to the firm organizing the offering
- Organization and offering expenses: 1-3%
- Acquisition fees: 1-2% when properties are purchased
Combined, these fees can total 10-15% or more of the investment amount. An investor who places $100,000 into a non-traded REIT might see only $85,000-$90,000 actually invested in real estate, with $10,000-$15,000 immediately going to fees and commissions.
Valuation Challenges: Because non-traded REITs don’t trade on public markets, there’s no daily market price. Instead, they provide periodic valuations (often annually or quarterly) based on appraisals of their property holdings. These valuations can be:
- Based on optimistic assumptions about property values
- Slow to reflect market deterioration
- Subject to conflicts of interest (the REIT sponsor has incentives to maintain high valuations)
- Difficult for investors to verify or challenge
Distribution Sustainability Questions: Non-traded REITs often promote attractive distribution yields (6-7% or higher), but these distributions may not be sustainable. Some non-traded REITs have paid distributions from:
- Offering proceeds (essentially returning investors’ own capital)
- Borrowed funds rather than property income
- Selling properties, which depletes the asset base
Investors who don’t understand the source of distributions may believe they’re receiving income from profitable real estate operations when they’re actually receiving return of their own capital.
Concentration Risk: Unlike mutual funds or publicly traded REITs that may own dozens or hundreds of properties, non-traded REITs typically own a smaller number of properties, creating concentration risk if specific properties underperform or experience tenant defaults.
Limited Transparency: While non-traded REITs must file reports with the SEC, they generally provide less frequent and less detailed information than publicly traded REITs, making it harder for investors to monitor their investments.
The Suitability Analysis: When Non-Traded REITs May Be Inappropriate
FINRA rules require brokers to have a reasonable basis to believe that recommended investments are suitable based on the customer’s investment profile. For non-traded REITs, this suitability analysis must consider multiple factors.
Investment Time Horizon:
Non-traded REITs are generally unsuitable for investors who may need access to their capital within 7-10 years. They’re designed as long-term, buy-and-hold investments where investors remain invested until the REIT eventually provides a liquidity event.
Investors approaching or in retirement, those with health concerns, or those without substantial liquid assets outside the REIT investment typically should not have significant allocations to non-traded REITs.
Liquidity Needs:
Even investors with long time horizons may have liquidity needs that make non-traded REITs unsuitable:
- Retirees who may need funds for healthcare or assisted living expenses
- Individuals without adequate emergency reserves
- Investors who might need to access funds for children’s education
- Those without other liquid investments to meet unexpected needs
The Statement of Claim in Hewko’s case alleges that clients “were unaware of the risk”—if this includes unawareness of the illiquidity, it represents a fundamental failure in the disclosure process.
Risk Tolerance:
While non-traded REITs are sometimes marketed as “conservative” income investments, they carry substantial risks:
- Property values can decline significantly during real estate downturns
- Tenants can default, reducing income and property values
- Leverage (borrowed money) magnifies both gains and losses
- Distributions can be reduced or suspended
- The eventual liquidity event may occur at a price below the original investment
Conservative investors who cannot afford to lose principal should generally avoid non-traded REITs or limit them to a very small percentage of their portfolio.
Income Dependency:
Investors who depend on distributions for living expenses face particular risks with non-traded REITs:
- Distributions can be reduced or suspended without warning
- Distributions may include return of capital rather than true income
- Unlike bond interest or preferred stock dividends, REIT distributions have no legal obligation to continue
If Hewko’s clients were retirees depending on REIT distributions for income, the suitability analysis becomes more complex. While distributions might have been attractive initially, if the clients didn’t understand the sustainability risks, the recommendations may have been unsuitable.
Concentration and Diversification:
Industry guidelines typically suggest that alternative investments (including non-traded REITs) should represent no more than 5-10% of an investor’s liquid net worth. When brokers recommend allocations exceeding these guidelines, the burden increases to demonstrate why such concentration is suitable.
Hewko’s defense emphasizes that clients had “a well-diversified portfolio that included various investment types and allocations.” However, the critical question is: What percentage of the clients’ liquid investable assets were placed in illiquid non-traded REITs?
A portfolio might be “diversified” across stocks, bonds, mutual funds, and non-traded REITs, but if 30-40% of the investable assets are locked up in illiquid real estate securities, the portfolio may still be unsuitable despite surface-level diversification.
Sophistication and Understanding:
FINRA expects brokers to ensure that clients understand the investments they’re purchasing. For complex products like non-traded REITs, this means explaining:
- How non-traded REITs differ from publicly traded REITs
- The lack of liquidity and difficulty of selling shares
- The high fees and their impact on returns
- How distributions are calculated and their sustainability
- The risks of property value decline and tenant defaults
- The typical 7-10 year holding period before liquidity events
- The possibility of losses if the eventual liquidity event occurs at depressed values
The allegation that Hewko’s clients “were unaware of the risk” suggests these critical disclosures may not have occurred or may not have been adequately explained in plain language the clients could understand.
The Commission Incentive Problem
One reason non-traded REITs generate frequent suitability complaints is the substantial commissions they pay to selling brokers—commissions that can create conflicts of interest.
Non-traded REIT commissions typically range from 6-10% of the investment amount. On a $100,000 investment, the broker might earn $6,000-$10,000 in commission—far more than the broker would earn from recommending publicly traded REITs, index funds, or other liquid alternatives.
This commission structure creates an inherent incentive for brokers to recommend non-traded REITs even when more suitable alternatives exist. Consider the comparison:
$100,000 Invested in Non-Traded REIT:
- Broker commission: $7,000 (7% typical)
- Dealer-manager fees: $2,000
- Other fees: $2,000
- Amount actually invested in real estate: $89,000
$100,000 Invested in Publicly Traded REIT:
- Transaction commission: $0-$50 (many platforms now charge no commission)
- Amount invested: ~$100,000
- Client retains full liquidity to sell at any time
The dramatic difference in broker compensation creates an obvious conflict: the broker earns far more by recommending the non-traded REIT, while the client receives less actual investment value and loses liquidity.
FINRA’s suitability rules and the SEC’s Regulation Best Interest require brokers to recommend investments that are in the client’s best interest, not the broker’s financial interest. When a broker recommends a high-commission, illiquid product over a low-commission, liquid alternative, the burden increases to demonstrate that the recommendation was driven by the client’s needs rather than the broker’s compensation.
If Hewko recommended non-traded REITs without discussing publicly traded REIT alternatives, or without explaining why the additional fees and illiquidity were justified for these particular clients, it strengthens the clients’ suitability claim.
Hewko’s Professional Background and the Tax Lien Disclosure
Leticia Hewko has been in the securities industry for approximately 10 years, working exclusively for Independent Financial Group, LLC since entering the field.
Current Employment:
Hewko has maintained continuous registration with Independent Financial Group since February 26, 2016—nearly nine years with the same firm. She operates from the firm’s Tustin, California branch office at 15145 Woodlawn Avenue.
Additionally, Hewko lists simultaneous employment with Cinergy Financial since June 2013, described as an “admin assistant” position that is investment-related. Her BrokerCheck disclosure clarifies that Cinergy Financial is actually “a DBA Name for Marketing Purposes Only” rather than a separate employer, indicating it’s a marketing name she uses while conducting business through Independent Financial Group.
Securities Licenses:
Hewko holds three securities licenses:
- Series 6 (Investment Company and Variable Contracts Representative) – passed February 26, 2016
- Series 7 (General Securities Representative) – passed November 1, 2016
- Series 63 (Uniform Securities Agent State Law) – passed October 14, 2014
- SIE (Securities Industry Essentials) – passed October 1, 2018
The Series 6 license, obtained first, authorizes sale of mutual funds and variable annuities but not individual stocks or bonds. The subsequent Series 7 license (obtained about nine months later) expanded her registration to allow sale of all securities products, including non-traded REITs.
Hewko is currently licensed to conduct securities business in 23 U.S. states and territories: Arizona, California, Colorado, Florida, Idaho, Illinois, Maryland, Massachusetts, Michigan, Nevada, New Hampshire, New Jersey, New York, North Carolina, Ohio, Oregon, Pennsylvania, South Carolina, Texas, Utah, Virginia, Washington, and Wisconsin.
Other Business Activities:
In addition to her securities activities, Hewko has been involved in tutoring since June 2008 (listed as non-investment-related). Her primary business activities relate to her role as a “Licensed Admin Assistant” with Independent Financial Group and her work under the Cinergy Financial marketing name.
The Outstanding Tax Lien:
In addition to the pending customer complaint, Hewko’s BrokerCheck record shows an unsatisfied tax lien filed by the State of California.
Lien Amount: $16,266.31
Lien Holder: State of California
Type: Tax Lien
Date Filed: June 25, 2024
Court: State of California, Orange County
Status: Outstanding (unpaid)
Date Hewko Learned of Lien: July 30, 2024
Tax liens against financial advisors raise questions about financial management and responsibility. While a tax lien doesn’t necessarily indicate improper conduct with client funds, it does suggest personal financial challenges. Clients may reasonably wonder whether a financial advisor who hasn’t resolved their own tax obligations is best positioned to manage others’ money.
The lien has been outstanding since June 2024 (over 18 months at the time of this writing). The failure to resolve a $16,266 tax obligation—while managing client investments potentially worth hundreds of thousands of dollars—creates an unfavorable impression.
FINRA requires brokers to disclose unsatisfied judgments and liens because they provide relevant information about the broker’s financial responsibility and potential conflicts of interest. An advisor facing financial pressure might be more susceptible to recommending high-commission products like non-traded REITs to generate income, even if they’re not optimal for clients.
The Timing and Pattern: When Were the Non-Traded REITs Recommended?
The BrokerCheck disclosure doesn’t specify exactly when Hewko recommended the non-traded REITs that are the subject of the complaint. However, the timing can be important for several reasons:
Market Conditions:
The real estate market has experienced significant volatility in recent years, particularly following the COVID-19 pandemic and the subsequent interest rate increases by the Federal Reserve starting in 2022. Commercial real estate—the primary asset class for non-traded REITs—has faced particular challenges:
- Office buildings have declined in value due to remote work trends
- Retail properties faced tenant defaults during lockdowns
- Industrial properties experienced volatility in supply chain disruptions
- Rising interest rates reduced property values and made refinancing more expensive
If Hewko recommended non-traded REITs before these market challenges emerged, clients might argue they weren’t warned about interest rate risk, pandemic risk, or changing work patterns that could affect commercial real estate. If recommendations came during or after these challenges, questions arise about why illiquid real estate investments were recommended when market risks were apparent.
The Clients’ Life Stage:
If the clients were approaching or entering retirement when the non-traded REITs were recommended, the suitability concerns intensify. Retirees typically need:
- Greater liquidity to handle healthcare and living expenses
- Lower risk tolerance due to limited ability to recover from losses
- Income predictability and sustainability
- Flexibility to adjust portfolios as needs change
Recommending illiquid, fee-heavy non-traded REITs to clients entering retirement raises serious suitability questions, even if the investments might have been appropriate for younger investors with long time horizons and ample liquid reserves.
Red Flags That May Indicate Unsuitable Non-Traded REIT Investments
Investors should be aware of warning signs that non-traded REIT investments may be unsuitable for their circumstances:
Pressure Tactics: Brokers who emphasize “limited time offers” or “exclusive opportunities” to create urgency around non-traded REIT investments rather than allowing time for careful consideration and review of offering documents.
Inadequate Explanation of Illiquidity: Brokers who downplay or fail to clearly explain that shares cannot be sold easily and investors may be locked in for 7-10 years or longer.
Emphasis on Distributions Without Sustainability Discussion: Focusing on attractive distribution rates (7-8%) without explaining how those distributions are generated and whether they’re sustainable or partially represent return of capital.
No Comparison to Publicly Traded Alternatives: Failing to discuss or compare publicly traded REITs that offer similar real estate exposure with full liquidity, lower fees, and daily pricing transparency.
Concentration Beyond Guidelines: Recommending that more than 10% of liquid net worth be placed in non-traded REITs, or recommending multiple non-traded REIT investments that create excessive concentration in illiquid real estate.
Inadequate Fee Disclosure: Not clearly explaining that 10-15% of the investment goes to fees and commissions before any money is invested in actual real estate.
Mischaracterizing Risk Level: Describing non-traded REITs as “safe” or “conservative” without explaining the risks of property value decline, tenant defaults, leverage, and illiquidity.
Insufficient Liquidity Analysis: Not asking about or analyzing the client’s emergency reserves, other liquid investments, and potential liquidity needs over the next 7-10 years.
Over-Reliance on Diversification Claims: Arguing that non-traded REITs are suitable simply because the portfolio is “diversified” without addressing whether the illiquid allocation is appropriate given the client’s overall financial situation.
No Discussion of Alternative Uses: Failing to discuss what the client might otherwise do with the money and whether those alternatives might better serve the client’s needs.
If you experienced any of these red flags when investing in non-traded REITs, it may indicate that proper suitability analysis and disclosure didn’t occur.
Can Investors Recover Losses from Non-Traded REIT Investments?
Investors who suffered losses from unsuitable non-traded REIT recommendations or inadequate risk disclosure may be entitled to recover losses through FINRA arbitration.
Non-traded REIT investments may be unsuitable when recommended to:
- Retirees or near-retirees who need liquidity and capital preservation
- Investors without adequate liquid reserves outside the REIT investment
- Conservative investors who cannot afford to lose principal or sustain reduced distributions
- Investors who were not adequately informed about illiquidity, fees, and risks
- Clients with significant allocations (over 10% of liquid net worth) to non-traded REITs
- Investors who were not offered or informed about publicly traded REIT alternatives
- Those who depend on distributions for living expenses without understanding sustainability risks
Patil Law, P.C. has over 15 years of experience representing investors in FINRA arbitration and securities litigation involving non-traded REITs, REIT losses, broker misconduct, and inadequate disclosure. We have successfully recovered more than $25 million for clients across 1,000+ cases.
Our Experience with Non-Traded REIT Cases
Non-traded REIT cases require attorneys who understand both securities law and the unique characteristics of these investments, including fee structures, liquidity constraints, distribution mechanics, and industry suitability standards. Our legal team—led by attorney Chetan Patil and including attorneys Gabriela Dubrocq and Patricia Herrera—focuses exclusively on investor protection and has handled numerous cases involving:
- Unsuitable non-traded REIT recommendations based on age, liquidity needs, or risk tolerance
- Excessive concentration in illiquid real estate securities
- Inadequate disclosure of fees, illiquidity, and risks
- Failure to supervise broker recommendations
- Misrepresentation of distribution sustainability
- Elder financial abuse involving non-traded REITs sold to retirees
- Breach of fiduciary duty regarding unsuitable real estate investments
We work on a contingency fee basis, which means you pay no attorney fees unless we successfully recover money for you. All consultations are completely free and confidential, with no obligation.
Understanding FINRA Arbitration for Non-Traded REIT Claims
FINRA arbitration provides the primary forum for resolving disputes between investors and brokers regarding non-traded REIT investments. The arbitration process offers several advantages for investors pursuing these claims:
Discovery of Sales Materials: Investors can obtain prospectuses, private placement memorandums, sales presentations, internal firm communications about the products, and due diligence reports that may show what the broker and firm knew about the products’ risks.
Account Documentation: Through discovery, investors can obtain their complete account file, including suitability questionnaires, account opening documents, and notes from conversations with the broker about their financial situation and investment objectives.
Expert Testimony: Securities experts can testify about industry standards for recommending non-traded REITs, proper suitability analysis, required disclosures, and whether the broker’s conduct met professional standards.
Commission Disclosure: Discovery can reveal exactly how much commission the broker earned from recommending the non-traded REIT versus alternative investments, helping demonstrate potential conflicts of interest.
Faster Resolution: FINRA arbitration typically resolves cases within 12-16 months, providing much faster resolution than court litigation which can take several years.
Reasonable Costs: While arbitration involves filing fees and costs, it’s generally less expensive than traditional court litigation due to streamlined procedures.
However, investors must act within FINRA’s statute of limitations. Claims generally must be filed within six years of the investment or from when the investor discovered (or should have discovered) that the investment was unsuitable. Missing this deadline can result in permanent loss of recovery rights.
Time Limits Apply: The Six-Year Rule
If you invested in non-traded REITs through Leticia Hewko—or if you experienced similar issues with unsuitable non-traded REIT recommendations, inadequate disclosure, or broker misconduct with any financial advisor—time may be running out to protect your rights.
FINRA’s six-year eligibility rule is strictly enforced. For non-traded REIT investments, determining when the clock starts can be complex:
- Does it run from the date of the initial investment?
- From when you discovered the investment was unsuitable?
- From when you first tried to sell and learned about the illiquidity?
- From when distributions were reduced or suspended?
- From when the REIT announced a liquidation at prices below your investment?
The specific facts determine which date applies, making it critical to consult with experienced securities attorneys promptly to evaluate your rights before the deadline expires.
Don’t let the statute of limitations expire—once the six-year period passes, you may permanently lose your ability to recover losses from unsuitable non-traded REIT investments.
Related Brokers and Firms
Investors who have concerns about non-traded REIT investments, liquidity issues, or broker misconduct may want to review information about related practice areas:
- Independent Financial Group Advisors Complaints
- REIT Losses
- FINRA Arbitration
- Broker Misconduct
- Investment Fraud
- Failure to Supervise
- Elder Financial Abuse
- Variable Annuity Fraud
Frequently Asked Questions About Non-Traded REIT Investment Claims
What are the specific allegations in the complaint against Leticia Hewko?
The FINRA arbitration (Case #25-01341) filed June 30, 2025, alleges that Hewko recommended unsuitable non-traded REIT investments to clients and that the clients were unaware of the risks associated with these investments. The Statement of Claim seeks damages between $100,000 and $500,000. Hewko denies the allegations and asserts that the clients had a well-diversified portfolio with various investment types and allocations. She plans to defend the claim as without merit. The arbitration remains pending with no hearing date set yet.
How do non-traded REITs differ from publicly traded REITs, and why does it matter?
The fundamental difference is liquidity. Publicly traded REITs trade on stock exchanges like any other stock—you can buy or sell shares instantly at the current market price with minimal transaction costs. Non-traded REITs have no public market, meaning you typically cannot sell your shares except through limited share repurchase programs (with strict caps and often at discounted prices) or by waiting 7-10+ years for the REIT to provide a liquidity event. Additionally, non-traded REITs charge much higher fees (10-15% upfront) versus minimal or zero fees for publicly traded REITs. This difference is critical for investors who may need access to their money or who want daily transparency on the value of their holdings.
What damages can be recovered in non-traded REIT suitability cases?
Successful claims may recover several types of damages: the difference between what you paid for the investment and its current value (or liquidation value if the REIT has been sold); opportunity costs (what you would have earned if the money had been invested in suitable alternatives like publicly traded REITs or diversified portfolios); fees and commissions that wouldn’t have been charged with suitable investments; damages from suspended or reduced distributions if you were relying on that income; interest on the losses; and in some cases, punitive damages for egregious conduct. Additionally, FINRA panels may award attorneys’ fees and arbitration costs to prevailing investors.
How can I tell if my non-traded REIT investment was unsuitable?
Consider these factors: Did you understand you couldn’t sell the shares when you invested? Were you approaching or in retirement when you invested? Do you have adequate liquid reserves outside the REIT investment (at least 6-12 months of living expenses plus funds for foreseeable major expenses)? Does the REIT investment represent more than 10% of your liquid net worth? Were you depending on distributions for living expenses? Did your broker discuss publicly traded REIT alternatives that would provide liquidity? Did you understand that 10-15% of your investment went to fees before being invested in real estate? If the answer to any of these questions suggests misalignment between the investment and your circumstances, the recommendation may have been unsuitable.
What is the outstanding tax lien on Hewko’s record, and does it affect investors?
Hewko has an unsatisfied tax lien filed by the State of California on June 25, 2024, for $16,266.31. The lien remains unpaid as of the BrokerCheck report date. While a tax lien doesn’t directly indicate misconduct with client funds, it raises questions about financial responsibility and management. FINRA requires disclosure of unsatisfied liens because they provide relevant information for investors evaluating whether to work with a financial advisor. Financial advisors facing personal financial pressures might be more motivated to recommend high-commission products to generate income, potentially creating conflicts between their interests and clients’ interests.
Can I recover losses even if my portfolio was “diversified” across multiple investments?
Yes, potentially. The presence of diversification doesn’t automatically make individual unsuitable investments appropriate. The key questions are: What percentage of your liquid investable assets were placed in illiquid non-traded REITs? Were the non-traded REITs suitable given your age, liquidity needs, risk tolerance, and time horizon? A portfolio might include stocks, bonds, mutual funds, and non-traded REITs and still be unsuitable if too much is concentrated in illiquid investments, if the investments don’t match your risk profile, or if you weren’t adequately informed about the risks and limitations of the non-traded REITs. Hewko’s defense emphasizes diversification, but the critical question remains whether the allocation to illiquid, high-fee non-traded REITs was appropriate for these particular clients.
What should I do if I’m invested in non-traded REITs and concerned about suitability?
First, gather all documentation including the private placement memorandum, account statements, correspondence with your broker, and any materials you received when the investment was recommended. Review these documents to understand the fees you paid, the liquidity provisions, and the redemption program terms. Calculate what percentage of your liquid net worth is invested in non-traded REITs. Determine whether you may need access to this money within the next 5-10 years for any reason. Request information from the REIT about the current estimated value per share and any updates on liquidity events. Then consult with experienced securities attorneys who can evaluate whether the recommendations were suitable, whether adequate disclosures were provided, and whether you have viable claims to recover losses. Don’t delay—FINRA’s six-year statute of limitations means prompt action is essential
About Patil Law, P.C.
Patil Law, P.C. is a securities litigation firm dedicated to representing investors who have suffered losses due to broker misconduct, unsuitable recommendations, and securities fraud. Founded in 2018 by attorney Chetan Patil, the firm focuses exclusively on FINRA arbitration and investment loss recovery.
With over 15 years of combined experience in securities law, Patil Law has successfully recovered more than $25 million for clients across 1,000+ cases. Attorney Chetan Patil earned his law degree from Case Western Reserve University School of Law. Attorneys Gabriela Dubrocq and Patricia Herrera earned their law degrees from University of Miami. The firm handles cases nationwide involving unauthorized trading, churning, unsuitable investments, breach of fiduciary duty, and failure to supervise.
Patil Law works on a contingency fee basis, meaning clients pay no attorney fees unless the firm successfully recovers money on their behalf. All consultations are free and confidential.
Disclaimer: The information in this post is based on FINRA BrokerCheck records and public filings. Allegations described are pending or unproven and may be contested. All investors are entitled to fair treatment under securities laws. This is attorney advertising. Prior results do not guarantee a similar outcome. This communication is for informational purposes only and does not create an attorney-client relationship.