Alternative investment valuation

[Bird]

Found a couple of these in our pooled funds this year (and noticed one that has been around for a while but didn't realize the values given weren't really "values"). I'm talking about the David Lerner Apple partnerships, non-traded "business development companies" (a type of closed-end mutual fund) and the like. And I'm talking about relatively small plans, all DC but it would be relevant for DBs as well.

They generally give a year-end "statement" that has the last public offering price or cost basis or something similarly irrelevant, but which gives the appearance of a current value.

Just wondering what other folks are doing as far as determining a value. In most cases, I will make it clear that we can't just take the number of off the statement, and will more-or-less get the trustee to give us a value (probably the number on the statement, but at least we've turned it around so the trustee is giving it to us and we are not just reading it off a statement). Then we'll use a 5500 instead of 5500-SF because we don't have a fair market value.

Any thoughts?

[mbozek]

i would be very wary of valuations of any david lerner financial products that do not have an independent appraisal. See link to valuation issues of Apple Reits sold by lerner.

http://www.whitesecuritieslaw.com/2012/01/31/david-lerner-in-more-trouble-over-apple-reits/

Some Reits may have valuations based on recent trades.