Massachusetts regulators have issued a complaint against Appleton, Wisc.-based SII Investments regarding purchases of unlisted REITs and the reporting of client assets.

In a complaint levied by Massachusetts Secretary of the Commonwealth William F. Galvin on Wednesday, SII Investmetns is accused of engaging in “dishonest and unethical conduct” by allowing employees to systematically inflate reporting of clients’ liquid net worth, and of maintaining unclear rules surrounding the purchase of REITs.

SII Investments is a subsidiary of National Planning Holdings, a broker-dealer network recently purchased by LPL from Jackson National.

According to the complaint, SII did not appropriately supervise purchases and allocations of unlisted REITs on a day-to-day basis.

SII allegedly sold Massachusetts clients shares for more than $4.6 million in 93 different non-traded REITs between 2011 and 2016, according to the complaint, with the firm’s agents receiving more than $278,000 in commissions and the firm receiving more than $27,000 in direct commissions due to those sales. Massachusetts regulators claim that all of these sales included an inappropriate calculation of clients’ net worth.

Though the firm had rules forbidding its agents to invest more than 10 percent of a client’s net worth into any single non-traded REIT, SII inappropriately included assets like annuities with high surrender fees in its calculations, inflating a client’s liquid net worth and obscuring allocations to non-traded REITs that violated SII policies. SII Investments policy also forbade allocating more than 20 percent of a clients’ liquid net worth across all non-traded REITs.

While the complaint acknowledges that SII had rules in place to forbid the inclusion of products that carry a “substantial penalty” into its calculations, nowhere did the firm define what constituted a “substantial penalty,” and its sales personnel did not apply the rules when calculating clients’ net worth, according to the state regulators.

In at least one case, at least 35 percent of a client’s net worth was allegedly allocated to one non-traded REIT.

In Galvin’s complaint, the State seeks a cease and desist order against SII, a censure, an accounting of all losses attributable to their alleged wrongdoing, disgorgement of any ill-gotten profits and restitution to compensate investor losses, an administrative fine and an order requiring that SII retain an independent consultant to review SII’s compliance policies and procedures