Investigating Potential Claims Involving CION Investment Corporation
Did you invest in CION Investment Corporation at the recommendation of your broker and lose money? If so, 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.
CION Investment Corporation invests primarily in the senior-secured debt of private U.S. middle market companies, and since commencing its initial continuous public offering in July 2012, has raised $1.1 billion in investor equity.
CĪON Investment Corporation states that it is a non-diversified closed-end management investment company that has elected to be treated as a Business Development Company under the Investment Company Act of 1940.
CION Investment Corporation appears to have raised money for its investment through a Reg D private placement offering. Reg D private placements such as CION Investment Corporation are then typically sold by brokerage firms in exchange for a large up front commission, usually between 7-10%, as well as additional “due diligence fees” that can range from 1-3%.
CION and Apollo Announce Joint Venture
CION Investment Group LLC and Apollo Investment Management LP, the sponsor and sub-adviser of non-traded business development company CION Investment Corporation, are creating a joint venture where both companies will own a 50 percent interest in CION Investment Management LLC, the BDC’s adviser.
Apollo Investment Management was issued a newly-created class of membership interests in CION Investment Management and will share in the adviser’s profits, losses, distributions and expenses, the filing said.
Although the independent directors of CĪON Investment Corporation unanimously approved the termination of the sub-advisory agreement, Apollo will continue to perform identical services for the adviser and the BDC, including identifying investment opportunities and making investment recommendations. Apollo will not be paid a separate fee in exchange for their services.
The Trouble with BDCs
The White Law Group continues to investigate the liability that brokerage firms may have for improperly selling BDCs like CION Investment Corporation.
BDCs like CION Investment Corporation involve a high degree of risk and are typically sold as unregistered securities. They lack the same regulatory oversight as more traditional investment products like stocks or bonds.
Broker dealers that sell alternative investments are required to perform adequate due diligence on all investment recommendations. They must 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.
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. Many investors do not fully understand the risks of these types of investments. Brokers often 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. 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 CION Investment Corporation, 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 White Law Group and its representation of investors, visit www.WhiteSecuritiesLaw.com.