July 14, 2017 Comments (0) Current Investigations

Four Springs Capital Trust Withdraws IPO

Four Springs Capital Trust
(Last Updated On: July 20, 2017)

Investigating Potential Claims in Four Springs Capital Trust

Are you concerned about investment losses in Four Springs Capital Trust? 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.

Four Springs Capital Trust is a Maryland Real Estate Investment Trust, or REIT, formed in 2012, according to their website. Since inception, they have focused on acquiring and managing a diversified portfolio of single-tenant, income-producing commercial properties. These properties are subject to long-term triple or double net leases with investment grade or other creditworthy tenants. As of March 31, 2017, the REIT owned or had interest in a $188 million portfolio of 48 properties that was 100 percent leased to 23 tenants.

The company said it has canceled its $115.9 million initial public offering due to “unfavorable market conditions,” according to a filing with the Securities and Exchange Commission.

5.6 million common shares were expected to be sold between $17.00 and $19.00 each. They were declared effective by the SEC and the company was prepared to list its shares on the NYSE under the ticker symbol “FSPR.”

The company said that it will not proceed with the public offering at this time due to “unfavorable market conditions” and that no securities have been sold or will be sold pursuant to the registration statement.

The Risks of Reg D Private Placements

Four Springs Capital Trust raises money through Reg D private placement offerings. These Reg D private placements 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%.

The trouble with private placements like Four Springs Capital Trust, is that they involve a high degree of risk. They are typically sold as unregistered securities which lack the same regulatory oversight as more traditional investment products like stocks or bonds.

The White Law Group is investigating the liability that brokerage firms may have for improperly selling private placements like Four Springs Capital Trust.

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.

However, another problem with Reg D private placements is the high sales commissions and due diligence fees the brokers earn.  Brokers have an enormous incentive to push the product to unsuspecting investors who do not fully understand the risks of these types of investments. They can easily misrepresent the basic features of the products – usually focusing on the income potential and tax benefits 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.

Free Consultation

To determine whether you may be able to recover investment losses incurred as a result of your purchase of Four Springs Capital Trust or another private placement investment, 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.