United Development Funding IV (UDF IV) Investigation
United Development Funding IV, a real estate investment trust (REIT) was organized in 2008 and sold for $20 per share. At the time UDF was a non-traded REIT. It wasn’t until June 2014 that the REIT went public and shares began trading on the NASDAQ under the ticker symbol “UDF.”
UDF IV stock prices plummeted in December 2015 after a three page anonymous letter Titled “A Texas-Sized Scheme: Exposing the Darkest Corner of the REIT Business, United Development Funding,” was published on a popular investor website. According to Yahoo Finance, we now know that the anonymous post was Kyle Bass’s Hayman Capital.
Since than, hedge fund manager Kyle Bass has accused UDF of perpetuating a Ponzi-like real estate scheme, which further diminished UDF stock prices. On the website UDF Exposed, Bass alleges UDF is using new investor money to pay existing investors. Bass called UDF “a billion dollar house of cards and ” on the verge of collapse.
In a press release, the company responded, “We believe that this hedge fund is trying to unlawfully profit by manipulating and depressing the price of United Development Funding IV shares.”
Unfortunately News for Investors
Unfortunately for investors, this wasn’t the end of falling share prices. According to Reuters, on Feb 18, 2016 shares of UDF IV plunged more than 50 percent after the FBI raided the company’s offices located outside of Dallas. FBI’s spokeswomen confirmed the search and told reporters,”The FBI is lawfully present and conducting law enforcement activity United Development Funding.” It would appear a criminal investigation is underway.
Investment News reported that at the time of the FBI search company officials and certain other employees were served with subpoenas for company documents.
Nasdaq Stock Market halted trading the day of the raid with UDF IV prices at $3.20. Compared to the closing price of $17.70 on Dec. 1, 2015 the company’s stock is down more than 80 percent.
The White Law Group continues to investigate the liability some brokerage firms may have for recommending UDF to clients.
If a brokerage firm makes unsuitable investment recommendations or fails to adequately disclose the risks associated with an investment they may be liable for investment losses through a FINRA arbitration.
Recovery of Investment Losses
To determine whether you may be able to recover investment losses in United Development Funding IV, please contact The White Law Group at (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 Franklin, Tennessee.
For more information on the firm, visit www.WhiteSecuritiesLaw.com.