The Financial Industry Regulatory Authority has reached a settlement with Wells Investment Securities Inc., where the latter will pay a $300,000 fine for using misleading marketing materials in the sale of Wells Timberland REIT Inc., a non-traded real estate investment trust.
In a statement, Wells Investment Securities said that it "takes this and all regulatory matters seriously and has cooperated to its fullest extent to address the issues raised by FINRA.
"These proceedings were not related to any misuse of investor funds, nor were they a result of complaints received from Wells investors. As stated in the Letter of Acceptance, Waiver, and Consent, the advertising materials in question had been properly filed with the Securities and Exchange Commission and state securities regulators. In addition, certain of the materials were filed with FINRA."
FINRA said the advertising and sales materials had 116 misleading, unwarranted or exaggerated statements. The regulatory body specifically pointed to statements in the initial offering prospectus which said Wells Timberland intended to qualify for REIT status for 2006. Wells Timberland in fact did not do so until 2009.
In a press release, Brad Bennett, FINRA EVP and chief of enforcement, said, "By approving and distributing marketing materials with ambiguous and equivocal statements, Wells misled investors into thinking Wells Timberland was a REIT at a time when it was not a REIT."
FINRA's release said Wells neither admitted nor denied the charges but consented to the entry of the agency's findings.
Wells Investment Securities is part of Wells Real Estate Funds and not related to Wells Fargo Bank.
