Buy-Side or Sell-Side, Managing Expectations to Manage FINRA

Whenever I talk to broker-dealers or registered investment advisors, sooner or later we have to talk about the impact FINRA is making on the commercial real estate securities private placement offer marketplace. Evidently, the current solution for the seemingly endless stream of investment loss claims is to hammer everyone and force each representative to demonstrate they are not a bad actor or have bad habits. One “aw shucks”, definitely ruins ten thousand, “attaboys”, and takes many promising careers along with them. It is worse than death, taxes and failed offerings all combined.

If the goal is full transparency, comprehensive due diligence attention and knowing your customer’s risk tolerance, then the future could be grim, indeed.

In a perfect world both sell-side and buy-side participants would conduct a full valuation analysis every month of the holding period, conduct a full market and financial feasibility analysis of the market and site every month of the holding period, do all four corners of the underwriting review each month of the holding period, and obtain verification of all operating events and payments made every month of the holding period.

What are the odds of that happening?


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