The recent exit of Ashford Securities from the financial industry is a stark reminder of the risks inherent in the nontraded REIT sector and the regulatory failures that can leave investors vulnerable. Ashford Securities, a Dallas-based broker-dealer led by CEO Carl Steigerwald, officially filed its notice of termination with FINRA on January 29, 2026. This final step followed years of mounting pressure, including the firm’s delisting from the New York Stock Exchange in July 2024 and significant enforcement actions from federal regulators.
Regulatory Failures and Cybersecurity Breaches
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Before its closure, Ashford Securities faced intense scrutiny from the Securities and Exchange Commission (SEC). On January 16, 2025, the SEC charged the firm following a massive 2023 ransomware attack. The breach resulted in the theft of over 12 terabytes of sensitive data, exposing the personal information of approximately 46,000 individuals.
The SEC’s enforcement action focused on misrepresentations made by the firm following the incident. While Ashford settled the charges by paying a $115,231 civil penalty, the event highlighted a troubling lack of transparency. For investors, such “misrepresentations” are often a red flag that a firm may not be acting in their best interests, particularly when their sensitive financial data and capital are at stake.
A Turbulent REIT Marketplace
The downfall of Ashford Securities was accelerated by a “perfect storm” of economic factors that have made Real Estate Investment Trusts (REITs) a high-risk area for many portfolios:
- The Impact of High Interest Rates: Sustained high interest rates have created significant headwinds for real estate funds. As borrowing costs rose, returns slowed, leading to what industry experts call “REIT fatigue.” This lack of enthusiasm made it increasingly difficult for smaller firms like Ashford to raise capital.
- Stagnant Fundraising: Data from Robert A. Stanger reveals that fundraising for public, nontraded REITs fell to $5.7 billion in 2025. This stagnation has forced many firms into “survival mode,” leading to the suspension of dividends and the desperate search for “strategic alternatives” or buyers.
- The Dominance of Mega-Firms: Smaller broker-dealers found themselves unable to compete with the massive resources of giants like Blackstone Inc. As these large entities squeezed the market, smaller players were left with tighter margins and fewer options, often leading to the exact type of instability seen with Ashford.
Reevaluating Your Portfolio for 2026
The lackluster performance of the real estate sector in 2025—which saw a 1% decline while the broader S&P 500 surged by 16%—has exposed deep-seated issues like excessive leverage and poor balance sheets within many REITs. Financial advisors are now urging investors to be extremely selective, yet many individuals remain stuck in underperforming or illiquid nontraded REITs that were aggressively pushed by broker-dealers.
How Haselkorn & Thibaut Can Help
If you invested in products through Ashford Securities or have suffered losses in nontraded REITs, you may have grounds for a recovery claim. Broker-dealers have a legal obligation to provide truthful information and ensure that the investments they recommend are suitable for your specific financial goals and risk tolerance.
Haselkorn and Thibaut (InvestmentFraudLawyers.com) specialize in fighting for investors nationwide. With over 50 years of experience and a 98% success rate, we have the expertise to take on large financial institutions and recover the capital you worked hard to earn. We understand the complexities of investment fraud and the nuances of the REIT market.
We operate on a No Recovery, No Fee basis, meaning you pay nothing unless we successfully recover money for you. Our firm has a presence in Florida, New York, North Carolina, Arizona, and Texas, allowing us to represent investors across the country.
Don’t let broker-dealer negligence or market misrepresentations dictate your financial future.
Contact us today for a free, confidential consultation to discuss your legal options and see if you are eligible for a recovery.
Main Phone: +1 888-885-7162
Website: InvestmentFraudLawyers.com
