Did you lose money investing in United Development Funding IV (UDF IV)?
Galvin Legal, PLLC is launching an investigation on behalf of investors who may have suffered losses investing in United Development Funding IV (UDF IV) at the recommendation of their financial advisor. If you suffered losses investing in the investment, then Galvin Legal, PLLC may be able to help you recover your losses in a Financial Industry Regulatory Authority (“FINRA“) arbitration claim against the broker-dealer and/or registered representative that recommended the investment.
If you suffered losses and would like a free consultation with a securities attorney, then please call Galvin Legal, PLLC at 1-800-405-5117.
UPDATE 8/16/2020: The SEC has revoked the registrations of three United Development Funding funds for failure to comply with periodic filing requirements. The revocations are effective as of August 13, 2020. The funds include United Development Funding III (UDF III), a limited partnership, United Development Funding IV (UDF IV) (OTC: UDFI), a real estate investment trust that trades on the over-the-counter market, and United Development Funding Income Fund V (UDF V), a non-traded REIT. The SEC claims that the UDF funds failed to file any periodic reports since the third quarter of 2015. In September 2018, the SEC issued an order instituting proceedings (OIP) to determine whether it was necessary to suspend or revoke the funds’ registrations. “Although [the UDF funds] have taken steps to return to compliance, including the hiring of a new auditor, those steps are insufficient to justify a sanction other than revocation,” the SEC stated in its opinion. “[The funds] have not filed any of the reports identified in the OIP, and they have missed additional required filings since the OIP. The record further establishes substantial reason to doubt that they will return to compliance and avoid delinquencies in the future.” The UDF funds argued one of the reasons for the delinquencies was an alleged “short-and-distort” manipulation scheme that prevented obtaining the audited financial statements and reviews they needed for periodic reporting. UDF is currently suing Kyle Bass and his hedge fund Hayman Capital, accusing Bass of posting a series of anonymous online reports that claim that UDF operated as a Ponzi scheme – an accusation the company has vigorously denied.
UPDATE 2/5/17: According to a press released the company issued on January 26, 2017, the NASDAQ Listing and Hearing Review Council affirmed the NASDAQ Hearing Panel’s decision to delist shares of the REIT from the NASDAQ. The decision was due in part to the failure of UDF IV to file Form 10-K for the year ending December 31, 2015, and subsequent Form 10-Qs for the quarters ending March 31, June 30, and September 30, 2016.
UPDATE 11/9/16: On November 8, 2016, UDF IV’s board of trustees authorized a cash distributions of $0.08 per share to shareholders of record on November 18, 2016, payable on November 28, 2016.
UPDATE 10/27/16: On October 24, 2016, UDF IV’s board of trustees announced that it has no recommendation and expresses no opinion regarding an amended third-party tender offer from SCM Special Fund 3, LP and Mackenzie Capital Management, LP of $1.00 per share.
UPDATE 10/18/16: According to a company press release, the SEC has issued a Wells notice against UDF IV and the NASDAQ stock market has delisted its shares.
UPDATE 10/11/16: In October 10, 2016, MacKenzie Capital Management extended a tender offer to United Development Funding IV (UDF IV) investors, under which it offered to purchase shares from investors for $1.5 per share. This is significantly less than most investors paid for them.
If you suffered losses and would like a free consultation with a securities attorney, then please call Galvin Legal, PLLC at 1-800-405-5117.
What are Real Estate Investment Trusts (REIT)?
A Real Estate Investment Trust (“REIT”) is a complex investment that is generally only suitable for sophisticated high-net worth investors, and then only in certain circumstances. A REIT is an entity that owns, and may also manage, income producing real estate. REITs pool capital from multiple investors and use it to purchase properties, similar to mutual funds and other pooled investment vehicles.
A Real Estate Investment Trust can be offered in several different forms. A Public Exchange Listed REIT is registered with the U.S. Securities and Exchange Commission (“SEC”) and is publicly traded on a national securities exchange. A Public Non-Listed REIT is registered with the SEC, but does not trade on a major securities exchange. Finally, a Private REIT, also known as a private-placement REIT, is not registered with the SEC and does not trade on a national securities exchange.
If you suffered losses and would like a free consultation with a securities attorney, then please call Galvin Legal, PLLC at 1-800-405-5117.
United Development Funding IV (UDF IV) Due Diligence Requirement
FINRA requires brokerage firms to conduct due diligence on investments, such as United Development Funding IV (UDF IV), and to conduct a suitability analysis when recommending securities to a customer that takes into account the customer’s knowledge and experience. FINRA Rule 2111(a) states that “a member or an associated person must have a reasonable basis to believe that a recommended transaction or investment strategy involving a security or securities is suitable for the customer, based on the information obtained through the reasonable diligence of the member or associated person to ascertain the customer’s investment profile. A customer’s investment profile includes, but is not limited to, the customer’s age, other investments, financial situation and needs, tax status, investment objectives, investment experience, investment time horizon, liquidity needs, risk tolerance, and any other information the customer may disclose to the member or associated person in connection with such recommendation.”
Rule 2111 is composed of three main obligations: reasonable-basis suitability, customer-specific suitability, and quantitative suitability. Brokerage firms that fail to conduct adequate due diligence on investments they recommend, such as United Development Funding IV (UDF IV), or that make unsuitable recommendations can be held responsible for the customer’s losses in a FINRA arbitration claim.
If you suffered losses and would like a free consultation with a securities attorney, then please call Galvin Legal, PLLC at 1-800-405-5117.
Request a Free Consultation with a Securities Attorney
If you suffered losses investing in United Development Funding IV (UDF IV) and would like a free consultation with a securities attorney, then please call Galvin Legal, PLLC at 1-800-405-5117.
This information is all publicly available and is being provided to you by Galvin Legal, PLLC.
Galvin Legal, PLLC is a national securities arbitration, securities mediation, securities litigation, securities fraud, securities regulation and compliance, and investor protection law practice. For more information on Galvin Legal, PLLC and its representation of investors, please visit www.galvinlegal.com or call 1-800-405-5117.