June 24, 2014
Elizabeth M. Murphy
Secretary
Securities Exchange Commission
100 F Street, NE
Washington, DC 20549-1090
Sent via email rule-comments@sec.gov
Re: SR-FINRA-2014-006
Dear Ms. Murphy:
My name is Kenneth Mills. I’m 81 years old, and I am one of tens of thousands of individual investors in Inland American—the largest non-traded REIT. As someone personally effected by the lack of reliable and transparent share pricing of non-traded REITs, I would like to voice my support for the changes proposed by SR-FINRA-2014-006.
In 2006, at the advice of a local broker at my bank, I purchased shares of Inland American for $10 per share. In January 2014, those shares were estimated to be worth only $6.94 per share.
Investors like me could benefit tremendously from increased transparency. Without continual access to reliable share value information, individual investors like myself are at the mercy of the REITs. Products like Inland American are so lucrative for the sponsor, there is little incentive for it to self-police. Inland American investors were charged more than $825 Million in offering costs alone.
I have serious questions about the frequency and reliability of Inland American’s estimated share valuation. For example, it wasn’t until a year after the last offering closed that Inland American revealed that its estimated share value had dropped nearly 20%. The decrease continued until late last year. In January, Inland confirmed that its estimated share value was $6.94. Two months later, to add insult to injury, Inland offered to buy back shares for somewhere between $6.10 and $6.50.
Regular and reliable pricing is essential, because shareholders are forced early on to choose between taking dividends in cash or reinvesting them. Personally, I made the mistake of trusting Inland American’s share valuations. Had rules such as the ones currently proposed been in place, I would never have reinvested my retirement savings. I understand that this issue has come to the attention of California regulators, who have declined to renew Inland American’s securities registration.
I urge you to seize this opportunity to adopt the proposed changes and put them into effect immediately in order to protect investors like me.
Sincerely,
Kenneth Mills