CION Investment Corporation, Recovery of Investment Losses
The White Law Group continues to investigate potential claims involving broker dealers who may have unsuitable recommended CION Investment Corporation, a publicly registered non-traded business development company, to investors.
According to a press release on September 8, CION Investment Corporation announced results of its reconvened Annual Meeting of Shareholders held on September 7, 2021. The company says its shareholders have approved 5 proposals that will allow listing of the company’s common stock on the New York Stock Exchange.
The company reportedly anticipates that its shares of common stock will commence trading on the NYSE with the ticker symbol “CION” within the next 30 days. The company did not give information on the initial share price in the announcement and noted that “there can be no assurance that it will be able to complete the Listing in any certain timeframe or at all.” There was also no mention of a possible holding period before shareholders would be allowed to sell their shares after the listing is completed.
Complex, High-Risk Investment
The trouble with Business Development Companies (BDCs) is that they are complex and inherently risky products and typically are considered speculative.
Business Development Companies operate much in the same was as REITs (Real Estate Investment Trusts) with non-traded BDCs having many of the same problems for investors as non-traded REITs – like high-risk, high commissions, and lack of liquidity.
Unfortunately for investors, sales of nontraded BDCs hit new lows in 2020 and also had poor performance due to COVID-19’s negative effect on returns, according to a report by Robert a Stanger & Co.
Broker-dealers reportedly sold just $362.3 million in nontraded BDCs last year, the least since 2010, which was the year after the first product was launched, according to Robert A. Stanger & Co. Inc. Broker-dealers have sold more than $22.6 billion of nontraded BDCs since 2009. The brokers or advisors usually charge a 7% commission and the firm 1%, which translates into a total of $1.8 billion in commissions over that time, according to Investment News.
Many of these non-traded BDCs were promised to provide steady growth, and invulnerability from volatile markets, which has not happened. According to the Wall Street Journal, FINRA’s Vice President for Corporate Financing has said these products are an “ongoing concern” for the regulator and that “firms must ensure they are suitable for an investor’s risk profile and investment strategy.”
Investors looking to sell BDCs, often have difficulty finding a buyer, and can suffer significant losses on the sale. They also tend to come with high sales commissions and fees.
Broker dealers are required to inform clients of the risks associated with investment recommendations. They must ensure that those recommendations are suitable for the investor in light of the investor’s age, risk tolerance, net worth, and investment experience. Firms that fail to do so may be held responsible for any losses.
Filing a Complaint against your Brokerage Firm
If you have suffered losses investing in CION Investment Corporation A the securities attorneys at The White Law Group may be able to help you. Please call The White Law Group at 1-888-637-5510 for a free consultation.
For more information on the firm’s investigation, please see:
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. To learn more about The White Law Group visit www.whitesecuritieslaw.com.