November 16, 2020 Comments (0) Blog, Current Investigations

Cottonwood Residential Inc. Investment Losses

Cottonwood Residential Inc. Investment Losses, featured by Top Securities Fraud Attorneys, The White Law Group

Concerned about investment losses in Cottonwood Residential Inc.?

Have you suffered investment losses in Cottonwood Residential Inc.? 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.

According to its website, Cottonwood Residential is a Real Estate Investment Trust, which has acquired Tenant in Common interests in multiple properties. 

Cottonwood Capital raises money through Reg D private placement offerings like the company did for Cottonwood Residential REIT.  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%.

According to the form D, filed in 2018, the total offering amount purportedly sold to 1,584 investors was $133,510,876. In this particular offering the sales commissions and fees were estimated at 7% of the total offering amount. 

The Risks of Reg D Private Placements

The trouble with alternative investment products, like Cottonwood Residential REIT, is that they involve a high degree of risk and 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 Cottonwood Residential Inc.

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.

Recovery Options

To determine whether you may be able to recover investment losses incurred as a result of your purchase of Cottonwood Residential Inc.  or another Cottonwood investment, please contact The White Law Group at 1-888-637-5510 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. 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.

 

 

 

 

 

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