FINRA Amends Non-Traded REIT Pricing Proposal
Amid controversy related to estimating values of illiquid REITs and direct-participation programs on customer statements, FINRA has amended its non-traded REIT pricing proposal.
In an earlier version of the proposal, providing valuation would have been voluntary. If valuations were not provided, the securities could have been shown as “not priced.”
Under the revised proposal, estimated values of illiquid securities would have to be provided annually, rather than once every two years, beginning within 150 days after the second anniversary of breaking escrow. Likewise, under the revised proposal, product sponsors would have to calculate per-share values using one of two methodologies: either a net investment amount based on the proceeds available after offering costs, or an appraised amount calculated with the assistance, or confirmed by, an independent third party.
Those values would be presumed to be “reasonable” under FINRA rules.
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