May 2013 - FINRA issued Regulatory Notice 13-18 concerning compliance with the communications with the public rule (FINRA Rule 2210) concerning broker-dealer communications about unlisted REITS and other investments suh as DPPs. Among other things, FINRA is concerned about disclosures and discussion of distributions, stability, redemption and liquidity issues, performance, and comparisons to other products. FINRA is also concerned about use of pictures of real property and ensuring that sufficient disclosures are made in regards to the property being depicted. The full notice can be found here.
The issuance of this notice demonstrates, in my view, that FINRA continues to have concerns about sales practices and disclosures in this area. The 2013 examination priorities letter detailed concerns about many product types, included non-traded REITS. We can expect that FINRA will continue to be focused on problems/concerns in this area, and that routine and special examinations will target compliance with sales practice rules - and the communications standards - when dealing with these products. Firms and brokers should be aware of FINRA's concerns especially if they are engaging in sales of these products.