HOUSTON, Dec. 16, 2015 /PRNewswire/ -- Attorney Advertising – Fleming | Nolen | Jez, L.L.P. is investigating claims related to United Development Funding IV (NASDAQ: UDF) and other affiliated entities.
United Development Funding IV is a publicly traded Maryland real estate investment trust listed on the NASDAQ Global Select Market. UDF IV was ostensibly formed to generate interest income by investing in secured loans and producing profits from investments in residential real estate.
On December 10, 2015, allegations emerged on the investment website Harvest (hvst.com) that UDF IV and its affiliated entities exhibit "characteristics emblematic of a Ponzi scheme[.]" The allegations stated:
"(1) new capital, both equity and debt, is used to fund distributions to existing investors;
(2) subsequent UDF companies provide significant liquidity to earlier vintage UDF companies, allowing them to pay earlier investors; and
(3) if the funding mechanism funneling retail capital to the latest UDF company is halted, the earlier UDF companies do not appear to be capable of standing alone and the entire structure will likely unravel, with investors left holding the bag."
The affiliated entities include two public, non-traded REITs, United Development III and United Development Funding Income Fund V. The allegations continued that each of the UDF investment offerings "operate the same business, in the same markets, lending to the same borrowers" and as a result are exposed to concentrated risk.
Subsequent postings on Harvest provided more detail to the allegations, including that management of UDF and its affiliated entities misled investors and failed to fully disclose millions in losses associated with insider loans.
UDF III and UDF IV responded to these allegations in filings with the Securities and Exchange Commission, contending that the companies were "attacked by a hedge fund or funds who posted misleading anonymous posts" with the intention of "unlawfully manipulating the price of UDF IV shares[.]"
UDF IV's stock has plunged since the allegations first became public, dropping from $17.60 on December 10 to $9.50 as of today's market open.
Misleading statements by either the UDF companies or by hedge funds attempting to manipulate the market may be violations of state and federal securities laws. Fleming | Nolen | Jez, L.L.P. is actively investigating potential claims for investors in the UDF entities.
If you are aware of facts relating to this investigation or are an investor in United Development Funding, you can assist the investigation by contacting Fleming | Nolen | Jez, L.L.P. at 1-866-977-6671 or by emailing attorney David Hobbs at David_Hobbs@Fleming-Law.com.
Fleming | Nolen | Jez, L.L.P. is a Houston, Texas law firm with a national practice representing investors and consumers. For more information, please visit http://www.fleming-law.com/securities-fraud/united-development-funding/. Attorney advertising.
Fleming | Nolen | Jez, L.L.P. David Hobbs, 1-866-977-6671, David_Hobbs@Fleming-Law.com
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