Recover Losses from UDF III and UDF Land Opportunity Fund
If you lost money on UDF III or UDF Land Opportunity Fund, you may have a claim against your broker or his company (known as a broker-dealer) to recover your losses. UDF III and UDF Land Opportunity Fund are what is known in the industry as non-traded REITS, they are highly speculative, illiquid (meaning you cannot sell them), and generally unsuitable for most retail investors (ordinary people saving for retirement). If you are one of these people, and lost money in these investments, contact us today to discuss a claim. We are currently prosecuting claims on behalf of numerous individuals who have lost money on these products.
UDF Funds Fraught with problems from the outset
UDF III funds land acquisition and development loans to single-family lot developers, so most of UDF III’s asset base is tied to the housing development cycle making UDF III an unpredictable, speculative and overall, a high-risk and non-conventional investment. It appears their business model was also fraught with other conflicts and risks, as explained in one Forbes article,
“Uncovered in the last Annual Report [was] that UDF's largest individual borrower and its affiliates comprise approximately 61% of the outstanding balance of the portfolio...that is a huge risk and it could be catastrophic if the borrower defaults.”Forbes
As members and associated persons of FINRA, brokerage firms (aka broker-dealer) and their associated persons have an obligation when recommending to an investor the purchase, sale or exchange of any security to have reasonable grounds for believing that the recommendation is suitable for the investor. This includes ensuring that the broker-dealer has done its due diligence to understand the product, train its registered representatives on the product, determined that given the risks and rewards of the product it is suitable for some investors, and after conducting a suitability analysis, determine if the investment being recommended meets with the specific investor’s stated investment objectives and risk profile.
FINRA has warned that these types of investments are only suitable for a "very narrow band of investors capable of evaluating and being financially able to bear those risks."
It appears that for these products, the risks and issues with the investment far outweighed any potential gain and the investment should not have been sold to the public. Further, common is a lack of training of brokers regarding the investments. UDF III remained a high risk, speculative and illiquid investment; and thus, unsuitable for most investors. Indeed, according to UDF III’s own Co-Founder and CEO, Hollis M. Greenlaw, UDF III “involves a high degree of risk,” so only investors who could “afford a complete loss” should invest.
We are finding that many claimants, had limited risk tolerances and short-term investment horizons and could not “afford a complete loss;” and therefore, they should not have been prompted to purchase UDF III or UDF Land Opportunity Fund with their retirement funds. Rather than disclosing the risks associated with UDF III and UDF Land Opportunity Fund,. Investors were being told by their brokers that it was a “good,” “safe,” “low-risk,” high-return,” “reliable,” real estate investment based out of Texas where the “economy was booming" and “the real estate market was rapidly growing.”
The reality was that these investments were extraordinarily risky and should not have been sold to most investors. If you were sold these investments and suffered losses, you may have a claim. We represent investors across the country to further our mission, protecting investors, recovering losses.
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