NextPoint Extends Third Party Tender Offer for UDF IV, $1.10 per share
Have you suffered losses investing in United Development Funding IV (UDF IV) at the advice of your financial advisor? If so, the securities attorneys at the White Law Group may be able to help you. The firm has handled dozens of FINRA arbitration claims against brokerage claims involving those firms’ improper sale of UDF investments, including UDF III and UDF IV.
United Development Funding IV, a publicly traded real estate investment trust, has been embroiled in scandal over the past few years.
UDF IV previously traded on NASDAQ under the ticker “UDF” from June 2014 until December 2015. The company was delisted in October 2016 for failing to file its 2015 annual financial reports and subsequent quarterly reports with the SEC.
On Sept. 27, 2021, United Development Funding IV announced that it recommends Trust shareholders reject the eighth extended unsolicited tender offer made by hedge fund NexPoint Strategic Opportunities Fund to purchase all Trust common shares for $1.10 per share.
According to a press release, the Trust’s Board of Trustees believes that NexPoint’s extended tender offer price of $1.10 per share represents a substantial discount to the Trust’s current value, and that shareholders should reject the Tender Offer. As of December 31, 2020, the Trust’s book value was $13 per share, as reflected in the unaudited balance sheet as of that date included in the Trust’s August 2021 letter to Trust shareholders.
Shares of UDF IV were originally sold for $20 per share.
The SEC launched an investigation into United Development Funding IV in 2014 after a hedge fund manager accused the REIT of a Ponzi-like scheme. Kyle Bass, hedge fund manager and founder of Hayman Capital Management, publicly accused UDF IV of operating a “Ponzi-like real estate scheme,” in 2016, by using new investor money to pay existing investors. Hayman reportedly held a short position in the company’s common stock.
In February of 2016, United Development Funding IV disclosed that it received a grand jury subpoena. The FBI seized documents and computers in a raid of the UDF corporate offices in Grapevine, Texas. UDF has vehemently denied the Ponzi allegations and has since sued Hayman Capital and Bass.
Potential Lawsuits to Recover Financial Losses
Investors who purchased UDF investments in reliance upon the recommendation of a broker-dealer firm may also be eligible to pursue claims in arbitration against the firm and seek compensation for any losses they suffered as a result of those investments. These claims are distinct from the class action filed directly against UDF and could be pursued concurrently.
Brokers have a fiduciary duty to perform due diligence on any investment and to ensure that investment recommendations are consistent with their client’s age, net worth, risk tolerance, investment experience and objectives, risk tolerance. If a broker overlooks suitability requirements, investors may have an actionable claim to recover their losses in a product in a claim through FINRA dispute resolution.
The Financial Industry Regulatory Authority (FINRA) operates the largest securities dispute resolution forum in the United States, and has extensive experience in providing a fair, efficient and effective venue to handle a securities-related dispute.
For more information on the firm’s investigation, please see:
The White Law Group is a national securities fraud, securities arbitration, and investor protection law firm with offices in Chicago, Illinois. The firm represents investors in FINRA arbitration claims throughout the country.
To learn more about the firm’s representation of investors, please visit www.whitesecuritieslaw.com.