The troubled real estate investment trust United Development Funding IV (UDF IV) was sent a Wells notice by the SEC, indicating that SEC staff has made a preliminary determination to recommend an enforcement action against the company.
A Wells notice is not a formal allegation of wrongdoing but is meant to put the recipient on notice that it may be subject to a civil enforcement action or administrative proceeding.
For those who are new to our blog, the UDF family of REITs have been in trouble for nearly a year, since a hedge fund with a short position in the fund stated that UDF IV had been operating like a Ponzi scheme. Earlier this year, the FBI raided the UDF corporate offices in Texas.
More recently Nasdaq delisted UDF IV shares from trading, according to the company. Since then, the company publicly stated it was working to file its 2015 annual report and previous three quarterly reports with the SEC in order to start trading again. To date, UDF IV hasn’t filed its reports.
According to SEC filings, UDF IV has $684 million in assets. UDF-branded REITs and private deals were high-yield offerings, promising returns of between 8-10%. In addition to the company, several individuals associated with the REIT also have received Wells notices.
Have you invested in United Development Funding?
The attorneys at Dimond Kaplan & Rothstein, P.A. have recovered more than $100 million from banks and brokerage firms for their wrongful actions. Currently, DKR represents UDF investors and is pursuing FINRA arbitration claims to recover their investment losses.
If you invested UDF IV or any of the United Development Funds, you may have certain legal rights that require your immediate attention. Contact us to schedule an appointment or consultation today.