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July 16, 2014

FINRA Amends REIT Pricing Proposal

by The 401k Study Group ®

Under pressure from the SEC, Finra has amended its controversial non-traded REIT pricing proposal.

In an amendment filed Friday with the Securities and Exchange Commission, Finra would now mandate disclosure of estimated values of illiquid REITs and direct-participation programs on customer statements. In an earlier version of the rule, providing a value would have been voluntary, and if valuations were not provided, the securities could have been shown as “not priced.”

“After analyzing the comments, Finra agrees that showing securities on account statements as ‘not priced’ may be confusing to investors and does not fully promote transparency,” Finra said in a letter to the SEC Friday.

Under current rules, clearing firms and self-clearing broker-dealers must show the per-share values of unlisted DPPs and REITs when a security’s annual report includes a value, or alternatively, uses a figure from an independent valuation service.

Industry practice has been to use values from annual reports.


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