A new NASD regulation taking effect April 16 will require brokerage firms to include valuation information on some limited partnerships and REITs.
Under the new rule, firms must include valuation information on client statements if the annual reports of these securities include a per-share estimated value. If the sponsor does not publish an annual report, the valuation disclosure is still voluntary.
“Investors have a right to know what their investments are worth,” says Chris Davis, president of the Investment Program Association in Washington, D.C., a product sponsor trade group.
“One of the reasons these securities have fallen out of favor is that for too long inadequate information was provided on the owners' account statements,” adds Gus Carey, chairman of the IPA board and managing director of W.P. Carey & Co. Carey says clients get confused when they see no prices, so brokers resist recommending limited partnerships and REITs.