If so, you know or should know that your shares of United Development Funding IV (UDF IV) Real Estate Investment Trust (REIT) have declined over 82% in value in the last year; a hedge fund operator (Kyle Bass at Hayman Capital Management) is claiming that UDF IV is a Ponzi scheme; the United States Securities and Exchange Commission (SEC) has an ongoing investigation; and the Federal Bureau of Investigation (FBI) has raided it's offices to determine if any crimes were committed. Your VSR Financial advisor has probably told you he/she was blindsided by the bad news and had no way of knowing that anything was awry. But should VSR Financial and its financial advisors have been suspicious before they recommended that you invest in UDF IV? Was their investment recommendation suitable in light of the relevant facts they knew about you and the investment?
In a letter, Mr. Bass described how UDF purportedly operated. He charged that:
- UDF is using new investor money in UDF IV to pay existing investors in prior UDF offerings to perpetrate a Ponzi scheme.
- UDF management has been misleading investors about its track record and financial condition for years.
- UBS management's preying on "Mom and," retail investors, using complex real estate backed loans and UDF-controlled affiliates to hide the scheme.
According to UDF, it hired a Dallas law firm that supposedly conducted an investigation and found no wrongdoing the firm. However, UDF has not produced any written report or made the authors of the report and its investigators available for questioning about their findings. Apparently nobody believes the UDF report as the shares remain at all-time low of $3.20 per share.
Did you know that VSR Financial was responsible for investigating the UDF REITs before approving them for recommendation by its registered representatives to the public? It was required to not only review the prospectuses, sales literature and other financial information and materials related to the expected performance of the UDF REITs but to verify the accuracy of the information contained in those documents. VSR Financial was further required to make a "reasonable suitability" determination with respect to each of the UDF REITs. VSR Financial registered representatives and you believe that VSR Financial had thoroughly investigated the UDF REITs, including, but not limited to, the management team and their performance history, any and all conflicts of interest, and the feasibility of the targets when investors would receive the return of their principal investment, etc. . The VSR Financial registered representatives and customers like you were dependent upon the broker dealer to hire experienced investigators to fulfill its due diligence and suitability obligations and to advise them before they made any recommendation of the UDF REITs to any customers.
VSR Financial was under an independent duty to investigate these UDF REITs, its promoters and the representations and claims made in the offering documents, sales literature and other representations made by UDF and its affiliates. ___________________ could not blindly rely on the statements made by the UDF wholesalers in fulfilling its duty to independently verify the accuracy and/or reasonableness of the statements and projections made by the issuer and its affiliates. Yet that is just what we believe VSR Financial employees did in failing to fulfill their "due diligence" and "suitability" responsibilities.
We also believe that VSR Financial was negligent in its hiring and supervision of employees who negligently performed its "due diligence" and "suitability" obligations prior to authorizing its other registered representatives to recommend the UDF REITs to any of its customers. We believe that VSR Financial passed on misrepresentations and misleading statements, unreasonable projections about the UDF REITs and their promoters likelihood of success to its employees and customers in breach of its fiduciary duties and breached its contracts with FINRA and Claimants by violating NASD Rules 2110, 2310, and 3010 and FINRA Rules 2010 and 2020 causing investors to suffer millions of dollars in losses.
Have you suffered losses in your VSR Financial account due to misrepresented and unsuitable investments in any of the UDF REITs? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation. Mr. Pearce is accepting clients with valid claims against VSR Financial who may have engaged in misconduct and caused investors losses.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. Please see our Instablog profile (left column) for ways to contact us and get answers to any of your questions about this blog post and/or any related matter.