FS KKR Capital Corp. II Securities Investigation

Mar. 02, 2020 8:51 AM ET
Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Securities attorney

Contributor Since 2011

The White Law Group is a national securities fraud, securities arbitration, investor protection and securities regulatory/compliance law firm with offices in Chicago, Illinois and Vero Beach, Florida. We pride ourselves on providing quality legal services to our clients and handle securities fraud cases throughout the country. Many of our clients have lost a significant portion of their net worth as the result of the negligence of their financial professional. As such, we believe that part of our role as attorney is to offer a supportive environment for our clients and to provide advice and support as we attempt to recover these investment losses. Dedicated to the representation of investors in claims against their financial professional or brokerage firm, The White Law Group has the expertise to help investors defrauded in securities, investment and financial business transactions. For more information about The White Law Group call our Chicago office at 312-238-9650 or visit us on the web at http://www.whitesecuritieslaw.com.

Summary

  • Shareholders of FS KKR Capital Corp. may have Claims.
  • The White Law Group is investigating potential securities fraud claims involving the liability broker dealers may have for unsuitably recommending FS KKR Capital Corp. to investors.

FS KKR Capital Corp. II is a business development company reportedly “designed to provide a high level of current income.” The fund was launched at the end of 2019 as the product of a merger of four non-traded BDCs -- FS Investment Corporation II (FSIC II), FS Investment Corporation III (FSIC III), FS Investment Corporation IV (FSIC IV) and Corporate Capital Trust II (CCT II).

The fund primarily invests in floating rate, senior secured loans of private U.S. middle market companies and involves a high degree of risk and may be considered speculative, according to its prospectus.

“Because there is no public trading market for shares of FSK II’s common stock and FSK II is not obligated to effectuate a liquidity event by a specified date, if at all, it is unlikely that you will be able to sell your shares. If you are able to sell your shares before FSK II completes a liquidity event, it is likely that you will receive less than you paid for them. FSK II historically repurchased a limited number of shares pursuant to its share repurchase program, which has currently been suspended. FSK II may reinstate, amend, suspend or terminate its share repurchase program at any time. In addition, any such repurchases will be at the distribution reinvestment price on the date of repurchase.”

Similar to non-traded REITs, Business Development Companies (BDCS) are illiquid investments. Investors looking to sell BDCs, such as FS KKR Capital Corp. II, often have difficulty finding a buyer, and can suffer significant losses on the sale.

According to Central Trade & Transfer, secondary market for BDCs and non-traded REITs, shares of FS KKR Capital Corp. II were recently sold for $5.76 per share. This may mean losses to investors, as the original purchase price was $10.00 share.

The White Law Group is currently representing many BDC investors in claims against the brokerage firms that recommended products like FS KKR Capital Corp. II.

These claims result when broker-dealers fail to perform adequate due diligence on the investments before offering them for sale to their clients. Additionally the brokerage firms often fail to determine whether the investments were appropriate in light of their clients’ age, investment, experience, net worth, and tolerance for risk.

If you are concerned about your investments, such as FS KKR Capital Corp. II, please call the securities attorneys of The White Law Group at (888) 637-5510 for a free consultation.

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 Franklin, Tennessee.

For more information on The White Law Group, visit https://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.

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.