Investigation update on United Development Funding IV
According to reports, United Development Funding IV has announced that it had conducted an independent investigation of its business and found no evidence of fraud.
United Development Funding IV was listed on the Nasdaq in June 2014. In December, an anonymous post on an investor website claimed that the company, a lender to real estate developers, was operating like a Ponzi scheme. It was later revealed that hedge fund manager Kyle Bass, founder of Hayman Capital Management, was shorting UDF IV and shares plunged for months before they stopped trading at $3.20. The FBI raided UDF IV in the beginning of 2016.
The trust’s audit committee in December commissioned the investigation by the law firm Thompson & Knight, along with a group of forensic accountants. According to a press release, the independent investigation team found “no evidence to substantiate allegation levied by Hayman Capital Management of the operation of a Ponzi scheme.”
United Development Funding IV stated that there was “no evidence of fraud or misconduct on the part of the trust, its management, or its adviser.”
The company, which has $684 million in assets, has not issued financial results for the last quarter of 2015 and the first quarter of this year. Its auditor, Whitley Penn, resigned in November, a few weeks before Mr. Bass claimed the company was operating a Ponzi scheme, and has not been replaced.
The Investigation Continues
The White Law Group continues to investigate claims on behalf of UDF IV, focusing on the liability that brokerage firms may have for improperly selling the investment. Regardless of whether the investment turns out to be a Ponzi scheme or not, the investment remains a high-risk, high-commission investment that would not be appropriate for many investors.
Broker dealers are required to perform adequate due diligence on any investment they recommend and to ensure that all recommendations are suitable for the investor. Recommendations should be appropriate in light of the investor’s age, risk tolerance, net worth, and investment experience.
Broker dealers that fail to adequately disclose risks or make unsuitable investment recommendations can be held liable for investment losses in a FINRA arbitration claim.
Recovery of Investment Losses
If you have invested in United Development Funding IV and would like to speak to a securities attorney about the potential to recover your investment losses, please call The White Law Group at 1-888-637-5510 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 Vero Beach, Florida. To learn more about The White Law Group visit www.whitesecuritieslaw.com.