April 15, 2016 Comments (0) Blog

First Warning Sign for BDCA investors?

(Last Updated On: July 5, 2016)

According to documents filed with the SEC, on March 18 and 24, 2016, the board of directors of Business Development Corporation of America II  authorized the proper officers of the Company to prepare and mail to all stockholders of record as of March 25, 2016, a definitive proxy statement with respect to such special meeting for the following purposes: (1) to approve the sale of all or substantially all of the Company’s assets, the Company’s liquidation and the Company’s dissolution, pursuant to a plan of liquidation; (2) to authorize the Company to withdraw its previous election to be treated as a business development company under Sections 55 through 65 of the Investment Company Act of 1940, as amended; and (3) to approve the amendment to the Company’s Articles of Amendment and Restatement to remove its obligation to prepare and distribute quarterly and annual reports to its stockholders.

Apparently on April 5, 2016, at the special meeting of the Company’s stockholders, a majority of the Company’s stockholders, representing 69.87% of the outstanding shares entitled to vote, approved the same actions. There were no votes against the proposals. The Company is now implementing the approved actions, including the filing of this Form N-54C Notice.

It is unclear how this will impact the value of any investments made but it is certainly a curious move for BDCA to take, particularly in light of how things are going with BDCA I.

The White Law Group continues to investigate the liability that brokerage firms may have for improperly selling high-risk private placements like BDCA and BDCA II.

Broker dealers that sell alternative investments are required to perform adequate due diligence on all investment recommendations to ensure that each investment recommendation that is made is suitable for the investor in light of the investor’s age, risk tolerance, net worth, financial needs, and investment experience.

However, the problem with Reg D private placements is that the high sales commissions and due diligence fees the brokers earn for selling such products sometimes can provide brokers with an enormous incentive to push the product to unsuspecting investors who do not fully understand the risks of these types of investments or to outright misrepresent the basic features of the products – usually focusing on the income potential while downplaying the risks.

Fortunately, FINRA does provide for an arbitration forum for investors to resolve such disputes and if a broker or brokerage firm makes an unsuitable investment recommendation or fails to adequately disclose the risks associated with an investment they may be found liable for investment losses in a FINRA arbitration claim.

To determine whether you may be able to recover investment losses incurred as a result of your purchase of BDCA or BDCA II, please contact The White Law Group at 1-888-637-5510 for a free consultation.

The White Law Group is a national securities fraud, securities arbitration, and investor protection law firm with offices in Chicago, Illinois and Vero Beach, Florida. The firm represents investors throughout the country in claims against their brokerage firm.

For more information on the firm and its representation of investors, visit www.WhiteSecuritiesLaw.com.