October 16, 2018 Comments (0) Blog, Current Investigations

United Development Funding Losses- SEC Investigation

United Development Funding Investigation, Featured by Top Securities Fraud Attorneys, The White Law Group

Update on United Development Funding Losses

Are you concerned about your United Development Funding losses? If so, the securities attorneys at The White Law Group may be able to help you by filing a FINRA Arbitration claim against the brokerage firm that sold you the investment.

In July of 2018, the Securities and Exchange Commission reportedly reached an agreement with two United Development Funding REITs to pay $8.2 million in fines and payments to investors for failing to disclose that it could not meet its distribution payments.

As we have previously reported, the SEC had been investigating UDF since 2014 and issued a Wells notice against one REIT, UDF IV, in 2016.

“Rather than using those funds for development projects that were underwritten by UDF IV, UDF directed the developers to use the loaned money to pay down their older loans from UDF III,” according to the SEC. “In most of these cases, the developer never received the borrowed funds at all, and UDF simply transferred the money between funds so that UDF III could make the distributions to its investors.”

According to a recent SEC investigation, United Development Funding III LP (UDF III), a Delaware limited partnership, United Development Funding IV (UDF IV), a publicly traded real estate investment trust (OTCMKTS: UDFI), and United Development Funding Income Fund V (UDF V), a Maryland real estate investment trust were collectively delinquent in their obligations to file timely periodic reports since September 30, 2015.

UDF III, UDF IV and UDF V failed to file a Form 10-Q, according to the SEC. Further, the NASDAQ halted trading on UDF IV common shares on February 18, 2016 due to the company not submitting timely filed audited financial statements and the company was delisted on May 18, 2017.

United Development Funding failed to file annual reports under the Exchange Act Section 13(a), under the Exchange Act Rule 13a-1 as well as quarterly reports under the Exchange Act Rule 13a-13.

Further, shares of UDF III have just sold on Central Trade & Transfer on March 13, 2019, a secondary market for private placement investments, for just $1.86/share. This may be a huge loss for investors as the original offering price was $20.00/share.

Investigating Potential Lawsuits

The White Law Group continues to investigate the liability brokerage firms may have for improperly selling United Development Funding investments. The firm has handled dozens of FINRA arbitration claims against brokerage firms involving the improper sale of United Development Funding.

If a brokerage firm overlooks suitability requirements, investors may have an actionable claim to recover their losses in a product in a claim through FINRA dispute resolution.

Brokers have a fiduciary duty to perform due diligence on any investment. They must ensure that investment recommendations are consistent with their client’s age, net worth, risk tolerance, investment experience and objectives, risk tolerance.

If you are concerned about your investments with United Development Funding, the securities attorneys at The White Law Group may be able to help you. Please call the offices 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 Vero Beach, Florida.

For more information on The White Law Group, please visit our website at www.WhiteSecuritiesLaw.com.

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