According to a press release, the Securities and Exchange Commission has issued a Wells notice against investment trust United Development Funding IV, indicating that SEC staff may possibly recommend an enforcement action against the company.
Meanwhile, after a number of missed deadlines, the Nasdaq stock market has delisted UDF IV shares.
The UDF REITs have been troubled for almost a year:
-Shareholders have not been provided with any information regarding UDF IV since November 2015,when UDF IV's last periodic filing was made.
-In December, a third party alleged the firm had been operating for years like a Ponzi scheme.
-The FBI raided UDF IV's corporate offices in February 2016. The investigation is still pending.
- UDF IV's shares was suspended due to non-compliance in filing of periodic reports with the SEC.
-- Nasdaq stopped trading of UDF IV shares at $3.20, down 81% over the prior 12 months, according to Investment News.
Over the past several months, UDF IV has publicly stated it was working to file its 2015 annual report and its past three quarterly reports with the Securities and Exchange Commission in order to start trading again. UDF IV was a nontraded REIT that listed on Nasdaq in June 2014. It was sold to investors from 2009 to 2013 at $20 per share.
UDF IV plans to appeal the Nasdaq suspension, according to the press release. Meanwhile, individuals associated with UDF IV have also received Wells notices. A Wells notice is a preliminary determination by the SEC that it may recommend a civil enforcement action or administrative proceeding against a company or individual.
Investors who purchased UDF investments based on the recommendation of a broker-dealer firm may also be eligible to pursue claims in arbitration against the firm and seek compensation for any losses they suffered as a result of those investments.
Brokers have a fiduciary duty to perform due diligence on any investment and to insure that investment recommendations are consistent with their client's age, net worth, risk tolerance, investment experience and objectives, risk tolerance. If a broker overlooks suitability requirements, investors may have an actionable claim to recover their losses in a product in a claim through FINRA dispute resolution.
The White Law Group has handled dozens of FINRA arbitration claims against brokerage claims involving those firms improper sale of UDF investments, such as UDF IV.
For a free consultation with a securities attorney, please call The White Law Group at 1-888-637-5510.
The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Vero Beach, Florida.
For more information on The White Law Group, please visit our website at www.WhiteSecuritiesLaw.com.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.