Investigating Potential Claims in Carter Validus Mission Critical REIT II
SC Distributors (a/k/a Strategic Capital) is a leading provider of select alternative investments to financial advisors and their clients, according to their website.
The company often raises money for investments through Reg D private placement offerings like the company did for Carter Validus Mission Critical REIT II. 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%.
Carter Validus Mission Critical REIT II is a non-traded, publicly registered REIT that intends to employ a long-term, net lease strategy in order to help mitigate risk, provide greater certainty of rental income and maximize value for fund shareholders, according to their website.
Carter Validus Mission Critical REIT II Investor Update
On June 2, 2017, Carter Validus Mission Critical REIT II, Inc. (CVMCR II) reclassified 75 million total shares of authorized but unissued Class A, Class I, and Class T common stock. The 75 million shares were reclassified as Class T2 common stock. Class T2 shares have the same rights, voting powers, and terms of redemption as Class A, Class T, and Class I common stock, and are sold with a 3.0% selling commission and a 1.0% trailing annual distribution and servicing fee.
The Problem with Reg D Private Placements
The trouble with Reg D private placements, like Carter Validus Mission Critical REIT II, is that they involve a high degree of risk and are typically sold as unregistered securities. That means they lack the same regulatory oversight as more traditional investment products like stocks or bonds.
The White Law Group continues to investigate the liability that brokerage firms may have for improperly selling private placements like Carter Validus Mission Critical REIT II.
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.
Reg D private placements are also known for high sales commissions and due diligence fees. Brokers have an enormous incentive to push these products to unsuspecting investors who do not fully understand the risks. Sometimes brokers 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.
Please contact The White Law Group at 1-888-637-5510 for a free consultation, to determine whether you may be able to recover investment losses incurred as a result of your purchase of Carter Validus Mission Critical REIT II or another SC Distributors’ private placement investment.
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. 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.