April 1, 2016 Comments (0) Blog, Current Investigations

United Development Funding IV (UDF IV) Investor Recovery Options

ARC New York City REIT
(Last Updated On: February 14, 2017)

Concerned about investment losses in United Development Funding IV?

If you invested in United Development Funding IV, you are likely evaluating your litigation options.  The following breaks down the current status of United Development Funding IV (UDF IV) and the options available to investors.

(1)  What is United Development Funding IV?

United Development Funding IV is a Maryland real estate investment trust listed on The NASDAQ Global Select Market. UDF IV was formed primarily to generate current interest income by investing in secured loans and producing profits from investments in residential real estate.

(2)  Why should United Development Funding IV investors be concerned?

On February 18, 2016, the FBI raided United Development Funding IV’s office in Grapevine, Texas and seized documents and computers pursuant to a warrant signed by a federal judge. United Development Funding IV also disclosed that it received a grand jury subpoena.

On the same day, share prices of United Development Funding IV fell to $3.20 before trading was suspended. This follows after the Securities and Exchange Commission began its investigation into United Development Fund IV in 2014 and after famed hedge fund manager Kyle Bass alleged that UDF was using new investor money to pay existing investors, therefore perpetuating a Ponzi-like scheme. UDF denied any wrongdoing.

According to reports, the NASDAQ Stock Market LLC  has notified UDF IV that it is not in compliance with NASDAQ Listing Rule 5250(c)(1). The Rule requires timely filing of periodic reports with the Securities and Exchange Commission, and the notification letter was issued because the United Development Funding IV apparently did not timely file its Form 10-K for the year ended December 31, 2015.  UDF IV reportedly has until May 16, 2016 to submit to NASDAQ a plan to regain compliance with the NASDAQ Listing Rules.

Trading in UDF IV’s stock has been suspended since February 18, 2016, and no assurance can be given regarding the resumption of regular trading.

(3) Recovery Options

Class action lawsuits have been filed on behalf of purchasers of United Development Funding IV (NASDAQ: UDF).  The class period for at least one of those suits is June 4, 2014 through December 10, 2015. Generally speaking these class action lawsuits will seek to recover damages directly from United Development Funding for alleged violations of the federal securities laws.

Investors who purchased UDF investments in reliance upon 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.

These two avenues are not mutually exclusive (i.e. an investor could pursue a class action directly against UDF while also pursuing a claim against the brokerage firm that sold them the investment).

The White Law Group has handled dozens of FINRA arbitration claims against brokerage claims involving those firms improper sale of UDF investments, including UDF III and United Development Funding 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.