November 10, 2022

Real Estate Firm Fined for Registration Violations

A real estate firm settled SEC charges for failing to satisfy registration exemption requirements and selling interests in a real estate fund to purchasers who did not qualify as accredited investors.

In the Order, the SEC found that the firm claimed a registration exemption under Securities Act Rule 506(c) of Regulation D ("Exemption for limited offers and sales without regard to dollar amount of offering") but failed to verify that all the investors were accredited investors. The SEC said that the firm failed to obtain proof that an investor had sufficient income or net worth.

As a result, the SEC determined that the firm violated Securities Act Section 5(a) and (c) ("Prohibitions relating to interstate commerce and the mails"). To settle the charges, the firm agreed to (i) cease and desist and (ii) a civil monetary penalty of $400,000.

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