How to Recover Investment Losses involving Franklin BSP Lending Corp. (Formerly BDCA)
Have you suffered investment losses in Franklin BSP Lending Corp. a/k/a BDCA? If so, the securities attorneys of 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.
Franklin BSP Lending Corp. is a non-listed business development company with a $2.7 billion investment portfolio at fair value as of March 31, 2022, according to its website. In January 2022, Franklin BSP Lending Corp. changed its name from Business Development Corp. of America. FBLC’s investment portfolio primarily consists of loans to middle-market companies.
BDCs operate much in the same way as non-traded REITs (Real Estate Investment Trusts). BDCs pool investor money and use those funds as capital to invest in various businesses. The goal of a BDC is to invest in small and medium-sized businesses and help sustain and develop growth in those underlying businesses. When those businesses are profitable, the BDC can be a strong investment. Additionally, certain BDCs offer a desirable tax structure for investors.
However, “middle-market loans” are basically highly leveraged loans to private equity backed companies, and come with a large credit risk. When rising interest rates and inflation lead to a recessionary event BDCs, such as Franklin BSP Lending Corp., may take a big hit.
Franklin BSP Lending Corp. Share Repurchase Plan
Apparently, the company’s repurchase program is oversubscribed, as 40 million shares were reportedly submitted to the company for resale, yet the company only repurchased about 7% of the shares, according SEC filings.
On March 30, 2020, the company reportedly suspended its distribution reinvestment and stock purchase plan, effective immediately. The company said that until it reactivates the DRIP, shareholders will receive any distributions in cash, including March 2020 distributions that are paid in April 2020. No reason was given for the suspension in a filing with Securities and Exchange Commission, but other non-traded REITs have recently made similar suspensions in response to the Covid-19 global pandemic.
The distribution rate declined 39% — from $0.65 to $0.40 per share, and they are only being paid quarterly now, instead of monthly, according to filings with the SEC.
The company commenced its initial public offering in January 2011 and raised $1.9 billion before closing the offering in April 2015. The annualized yield for distributions was 7.78 percent based on its then public offering price of $11.15 per share.
Potential Lawsuits to Recover Financial Losses
The White Law Group continues to investigate potential claims against the broker dealers that sold high risk investments such as Franklin BSP Lending Corp. (BDCA) to investors. The high commission structure of these products leads to the possibility that unscrupulous financial advisors will push these products unsuitably to maximize their own commissions.
Broker dealers are required to perform adequate due diligence on any investment they recommend and to ensure that all recommendations are suitable for the investor. Recommendations should be appropriate in light of the investor’s age, risk tolerance, net worth, and investment experience. Broker dealers that fail to adequately disclose risks or make unsuitable investment recommendations can be held liable for investment losses in a FINRA arbitration claim.
If you have suffered losses in Franklin BSP Lending Corp. (BDCA) and would like to speak to a securities attorney about the potential to recover your investment losses, 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: Business Development Companies BDCs – the good, the bad, and the UGLY
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
Seattle, Washington. To learn more about The White Law Group visit www.whitesecuritieslaw.com.