Published On: July 22, 2015

Royal Alliance Associates was ordered to pay $1.4 million to three retirees over allegations that it was negligent in supervising sales of nontraded real estate investments trusts (REITs) and variable annuities. REITs are securities that sell like a stock on the major exchanges and invests in real estate directly, either through properties or mortgages. They are not suitable for all investors, as they can be risky investments. In Royal Alliance’s case, the retirees who were sold the REITs were former employees of AT&T Inc. and were encouraged by a former broker, Kathleen Tarr, to take a lump-sum buyout from their employer rather than a lifetime annuity. That money was then placed in REITs and variable annuities. These securities were high-cost, illiquid products, which turned out not to be suitable for the low-income and low-wealth AT&T retirees. According to the lawsuit: “Supervisors at Royal Alliance were not supervising these particular brokers. Part of the punitive award they received is due to the complete failure of Royal Alliance to supervise its registered reps.” Royal Alliance had a duty to supervise its brokers to attempt to prevent them for recommending unsuitable investments. If you invested with Royal Alliance Associates, you may be able to sue them for investment losses. Please call our Chicago-based securities law firm at 312-332-4200 to speak to an attorney. The call is free.

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