Have you suffered losses investing in Aequitas Commercial Finance offerings? If so the following information may be important.
Aequitas Commercial Finance is a limited liability company based in Oregon. As first reported by The Oregonian/OregonLive, Aequitas Commercial Finance has suffered a debilitating cash shortage that has forced it to lay off 80 of its 125 workers.
It appears that Aequitas provided a recent investor update that indicated that the company was having liquidity challenges and had engaged a leading provider of restructuring services. They also announced that they were ceasing any redemptions and interest payments on the notes. All in all, it sounds like the outlook for Aequitas Private Note holders is bleak.
The U.S. Securities and Exchange Commission and the Consumer Financial Protection Bureau have also launched separate investigations of the company. Brian Rice and Scott Gillis, two of the company's six senior partners, resigned in recent weeks. The company's general counsel just quit.
Despite these problems it wasn't long ago that Aequitas was still selling a bright future. According to reports, as recently as October, the company hosted its "Fall Summit" at the posh Allison Inn and Spa in Oregon's wine country. About 200 people, most of them investment professionals from around the country, apparently attended the overnight event, with Aequitas picking up the tab. Aequitas' own PowerPoint presentation reportedly shown at the gathering painted a rosy picture.
At the heart of this picture was Aequitas' CarePayment. CarePayment is a company that buys debt owed by patients to hospitals. In the era of catastrophic health insurance coverage, hospitals find themselves struggling to collect the money patients owe in deductibles and co-pays. CarePayment, widely seen as the gem of Aequitas' portfolio, provides consumers with that "gap" financing and works out a deal with the hospital to split the loan proceeds.
In theory, Aequitas had hit upon a fitting strategy for America circa 2015, where the the gulf between haves and have-nots continues to grow. Aequitas uses money from wealthy investors to fund and buy loans owed by the increasingly hard-pressed middle-class and the poor.
The plan hit a major snag though when Corinthian collapsed last May and the government charged the company with predatory lending practices, calling in to question much of Aequitas loan portfolio and their future ability to collect on those loans (despite the fact that Aequitas is apparently still collecting on the student debt even after a federal judge ruled that the loans violate two federal consumer protection laws).
As is seen in the case of many companies that raise capital using independent broker-dealers, in order to fund growth, Aequitas leaned heavily on financial advisors, offering enormous incentives to encourage financial advisors to push Aequitas products.
The White Law Group continues to investigate the liability that brokerage firms may have for improperly recommending Aequitas products. For more information on the firm's investigation, visit here.
Brokerage firms that sell private placements, like Aequitas private placement offerings, are required to perform adequate due diligence on the investments to ensure a reasonable likelihood of success, and to evaluate whether the investments are suitable in light of the client's age, net worth, investment experience, and investment objectives. Firms that fail to perform adequate due diligence, or that make unsuitable recommendations, can be held responsible for losses in a FINRA arbitration claim.
If you suffered losses investing in an Aequitas Commercial Finance offering and would like to discuss your litigation options, please call the securities attorneys of The White Law Group at (888) 637-5510 for a free consultation.
The White Law Group is a national securities arbitration, securities fraud, and investor protection law firm with offices in Chicago, Illinois and Vero Beach, Florida. The firm represents investors throughout the country in FINRA arbitration claims against brokerage firms.
For more information on The White Law Group and its representation of investors, visit WhiteSecuritiesLaw.com.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.