February 24, 2016 Comments (0) Blog, Securities Fraud

Risk Factors: United Development Funding IV

(Last Updated On: February 24, 2016)

Have you suffered investment losses in United Development Funding IV? If so, the securities attorneys of The White Law Group may be able to help you recover your losses by filing a FINRA Dispute Resolution claim against the brokerage firm that sold you the investment.

The trouble with non traded REITS, like United Development Funding IV, is that they are complex and inherently risky products. According to a 2009 Prospectus, investors are forewarned that shares of United involve a “high degree of risk” and that shares should be purchased “only if you can afford a complete loss of your investment.” Additional risk factors included:

  • If we, through our advisor, are unable to find suitable investments, then we may not be able to achieve our investment objectives or pay distributions.
  • We have no prior operating history and the prior performance of real estate investment programs sponsored by our advisor and its affiliates may not be an indication of our future results.
  • There is no public trading market for your shares; therefore, it will be difficult for you to sell your shares. If you are able to sell your shares, you may have to sell them at a substantial discount from the public offering price. In addition, we do not have a fixed liquidation date, and you may have to hold your shares indefinitely.
  • If we pay distributions from sources other than our cash flow from operations, we will have less funds available for real estate investments, and your overall return may be reduced.
  • The homebuilding industry’s strategies in response to the adverse conditions in the industry have had limited success, and the continued implementation of these and other strategies may not be successful.
  • Unfortunately for investors, some brokerage firms that sold United Development Funding IV may have marketed the investment as “safe,”and/or downplayed the risks. Non-Traded REITs complex high risk securities that lack liquidity which makes them unsuitable for many investors.

The high commissions associated with non-traded REITs, sometimes as high as 15%, may have provided enough incentive for some brokerage firms to overlook FINRA suitability rules when making investment recommendations to clients.

The White Law Group is investigating potential securities fraud claims involving broker-dealers’ improper recommendation that some investors purchase non-traded REIT investments. Brokerage firms that sell such products 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.

If you suffered losses investing in United Development Funding IV and would like a free consultation with a securities attorney, please call The White Law Group at (312)238-9650.

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.

For more information on The White Law Group, visit www.whitesecuritieslaw.com.