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What Investors Should Know about Real Estate Investment Trusts

A “good” investment portfolio is diverse, consisting of securities in a variety of industries. Brokers and financial advisors may recommend that you invest in real estate, and one way to do that it through a Real Estate Investment Trust, or REIT. REITs are a lot like mutual funds, in that they allow investors of all shapes and sizes to own a part of the holding. REITs come in two in forms: traded and non-traded. Traded REITs (those listed on the stock exchange) offer a number of benefits: they are relatively easy to buy and sell, operate with transparency, and generally offer a solid return on your investment. Non-traded REITs, however, are a different animal. There are a few things investors should know about the risks involved with these products before they agree to any purchases: Non-traded REITs are generally illiquid. REITs that are not on the stock exchange are difficult to sell, which can put investors in a bind if [...]

By |December 14th, 2016|Uncategorized|
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SEC Hits UDF With Wells Notice

The Frankowski Firm, LLC currently represents multiple investors who have invested in troubled United Development Funding REITs. Earlier this week, the Securities and Exchange Commission issued a Wells notice against the Texas company, which indicates that the SEC has made a preliminary determination to potentially recommend an enforcement action against it. Meanwhile, the NASDAQ stock market has delisted UDF IV shares. The UDF REITs have been in trouble for nearly a year. A hedge fund with a short position in UDF IV shares last December claimed the company had been operating as a Ponzi scheme for years. The FBI raided the REIT's headquarters in a suburb of Dallas in February. At that time, the NASDAQ stopped the trading of UDF IV shares at $3.20, which was down 81% over the previous year. During the last few months, UDF IV has publicly claimed that it was working to file its 2015 annual reports and its last three quarterly reports with the SEC [...]

By |October 19th, 2016|Fraud, Press Releases & News, SEC|
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Texas Broker-Dealer Fined Over Variable Annuities

An annuity exchange allows brokers to transfer an investor's funds in an annuity to a new policy without incurring tax penalties. IMS Securities, a small broker-dealer firm, was fined $100,000 by FINRA for failing to supervise their brokers who used the annuity exchange to benefit themselves, according to a recent Investment News article. The brokers at IMS were transferring investor funds to new investments under the annuity exchange, producing many more upfront commissions for themselves at the expense of their customers. IMS had a duty to supervise the brokers and the annuity exchange investments and were fined for failing to do so. The article stated that there are two other pending FINRA complaints against the owner and chief executive officer, as well as the chief financial officers and the compliance officers, over the sale of variable annuities, real estate securities and REIT sales. If you or someone you know has lost money as a result of an investment or broker misconduct, please [...]

By |October 7th, 2016|Uncategorized|
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UDF IV Defaults On $35M Loan

United Development Funding IV (UDF IV), a Texas Real Estate Investment Trust (REIT), has defaulted on a $35 million term loan and has suspended its distributions to shareholders. The trust has been surrounded by trouble since December, when an anonymous post on an investor website claimed that UDF IV was operating as a Ponzi scheme. Later it became known that hedge fund manager Kyle Bass, founder of Hayman Capital Management, was shorting the trust. Shares in the company dropped for months before they stopped trading at $3.20 after the FBI raided UDF's offices outside of Dallas in February. The loan UDF IV defaulted on was issued in July 2014 by Waterfall Finance 4. As part of the default, the trust has entered into a forbearance agreement with three lenders who succeeded Waterfall Finance 4. The agreement became effective on March 4, when UDF acknowledged certain events of default, according to a filing made with the SEC on May [...]

By |May 25th, 2016|Fraud, Press Releases & News, SEC|
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