Secondary Market Sales for FS Investment Corporation III
Did you lose money investing in FS Investment Corporation III? If so, the securities attorneys at The White Law Group may be able to help you recover your losses through a FINRA Arbitration Claim.
FS Investment Corporation III (FSIC III) is an investment offered by FS Investments (formerly known as Franklin Square Capital Partners).
FSIC III is a business development company (BDC) “designed to provide a high level of current income”, according to their website. FSIC III primarily invests in floating rate, senior secured loans of middle market private U.S. companies.
FS Investments often raises money through Reg D private placement offerings like the company did for FS Investment Corporation III. 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%.
Risks of BDCs
The White Law Group is investigating the liability that brokerage firms may have for improperly selling BDCs like FS Investment Corporation III to investors.
Business Development Companies (BDCs) like FS Investment Corporation III come with a high degree of risk. They are typically sold as unregistered securities, meaning they lack the same regulatory oversight as more traditional investment products like stocks or bonds.
Broker dealers are required to perform adequate due diligence on all investment recommendations. They must ensure that each investment recommendation is suitable for the investor in light of the investor’s age, risk tolerance, net worth, financial needs, and investment experience.
A 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. They may also focus on the income potential and tax benefits while downplaying the risks.
Secondary Market listing
Currently CFX Trading, a secondary market for private placement investments is listing share of FSIC III for just $6.84/share. Unfortunately for many investors, it appears that the secondary market price would represent a significant loss on their initial capital investment.
The Financial Industry Regulatory Authority (FINRA) provides an arbitration forum for investors to resolve disputes with their brokerage firm. 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.
You may be able to recover investment losses incurred as a result of your purchase of FS Investment Corporation III. 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.