Sacha Baron Cohen and Nicholas Schorsch - Masters of the House!
(Aug 2016)
On Monday, Global Net Lease, Inc. (GNL) and American Realty Capital Global Trust II (ARC Global Trust II) announce a merger. Under the agreement, ARC Global Trust II shareholders will receive 2.27 shares of GNL for each share of ARC Global Trust II common stock they own, which implies $19.59 per each share of ARC Global Trust II share based on GNL's closing price as of August 5, 2016. See ARC Global Trust II's 8-K announcing the merger and merger agreement.
It's a sordid tale, worthy of a...
A Bad Broker Found His Firm; You Should Avoid Them Both
(Jun 2016)
In June 2016, a FINRA panel in Albuquerque, NM ordered Centaurus Financial, Inc. to pay the Claimant, a recent widow when the subject conduct began, $150,000 plus all hearing fees after reasoned findings that "the investments Hashemian recommended while at Centaurus were not suitable", that Centaurus was responsible for Hashemian's actions which "constituted fraudulent and negligently made misrepresentation and omitted material information in the sale of investments" and that "Centaurus...
Nicholas Schorsch Cheated Investors in Recent Nontraded REIT Mergers
(Dec 2015)
Roll-ups
Recently we posted More Non-traded REIT Perfidy: The Roll-up Grift.
To re-cap: Non-traded REITs are required by state securities regulators to include language in their bylaws which closely tracks the 2007 North American Securities Administrators Association's Statement of Policy Regarding Real Estate Investment Trusts.1
NASAA guidelines protect shareholders in REITs which have not been trading for at least 12 months before being rolled-up. The protections include the requirement...
More Non-traded REIT Perfidy: The Roll-up Grift
(Nov 2015)
We have extensively researched non-traded REITs and concluded that these illiquid direct participation programs have cost investors $50 billion compared to more liquid investments in traded REITs. Our Fiduciary Duties and Non-traded REITs provides a good overview of the problems with non-traded REITs and a summary of our empirical results. An Empirical Analysis of Non-Traded REITs contains a more detailed explanation of our research. See our previous blog posts on individual non-traded...
The Worst Investment in the World! Behringer Harvard's Priority Income Fund
(Jun 2015)
I. Introduction
What could be worse than a non-traded REIT? Well, REIT-sponsor Behringer Harvard has managed to create something even worse than a non-traded REIT: The Priority Income Fund. On May 9, 2013, Behringer Harvard and the manager of publicly traded BDCs, Prospect Capital Management, announced the initial public offering for their new joint-effort Priority Senior Secured Income Fund (PSSI) now renamed Priority Income Fund.i
The best thing that can be said of the Priority Income Fund...
A Non-traded REIT Investor Fights Back
(Jun 2015)
On June 5, 2015, I wrote that American Realty Capital's latest listing of a non-traded REIT was further evidence of the harm caused by sponsors of non-traded REITs. I also pointed out that, contrary to the common pattern in non-traded REIT listings, Schorsch and ARC used their control of the non-traded REIT version of GNL to tie the hands of shareholders and management in the subsequent GNL traded REIT and to opportunistically transfer wealth to themselves. I pointed out that similar...
Nicolas Schorsch and American Realty Capital Lay Another Egg
(Jun 2015)
GNL: American Realty Capital Lays Another Egg
On Tuesday, non-traded REIT American Realty Capital Global Trust Inc. - rechristened Global Net Lease, Inc. - began trading on the NYSE under the ticker GNL. GNL is at least the 42nd non-traded REIT to have listed, or merged into or been acquired by another REIT since 1997 and adds to the mounting wealth toll non-traded REITs have extracted from unsophisticated investors.
My co-authors and I have determined that the non-traded REIT industry has...
Oil and Gas DPPs From Just Two Sponsors Have Caused $3.7 Billion in Losses
(Feb 2015)
We have written extensively about direct participation programs, or DPPs. See our blog posts on non-traded REITs and our discussion about equipment leasing DPPs. Oil and gas DPPs are another strain of the DPP epidemic: illiquid exposure to an existing underlying asset, loaded with confiscatory fees, conflicts of interest and unnecessary risk.
Oil and gas DPPs use some of investors' money to drill and operate oil and gas wells. Oil and gas DPPs are sponsored and managed either by investment...
Enforcement Actions: Week in Review - December 5th, 2014
(Dec 2014)
SEC ENFORCEMENT ACTIONS
SEC Charges California Resident With Fraudulent Sales of Stock
December 2, 2014 (Litigation Release No. 268)
The SEC has charged Vinay Kumar Nevatia for fraudulently selling $900,000 of private shares of CSS Corp. The SEC contends that Kumar, living in Palo Alto under several aliases, sold shares in 2011 and 2012 that he had already sold in 2008. Kumar has never been registered with the SEC.
SEC Announces Fraud Charges Against Two Executives in Scheme Involving...
