RADNOR, Pa., Dec. 22, 2015 /PRNewswire/ -- The law firm of Kessler Topaz Meltzer & Check, LLP announces that a shareholder class action lawsuit has been filed against United Development Funding IV (NASDAQ: UDF) ("UDF IV" or "the Company") on behalf of purchasers of the Company's securities between June 4, 2014 and December 10, 2015, inclusive (the "Class Period").
UDF IV shareholders who purchased their securities during the Class Period may, no later than February 19, 2016, petition the Court to be appointed as a lead plaintiff of the class. Any member of the purported class may move the Court to be appointed as a lead plaintiff through Kessler Topaz Meltzer & Check, LLP or other counsel, or may choose to do nothing and remain an absent class member.
UDF IV shareholders who wish to discuss this action and their legal options are encouraged to contact Kessler Topaz Meltzer & Check, LLP (Darren J. Check, Esq., D. Seamus Kaskela, Esq. or Adrienne O. Bell, Esq.) at (888) 299-7706 or at firstname.lastname@example.org. For additional information about this lawsuit, or to request information about this action online, please visit www.ktmc.com.
UDF IV is a real estate investment trust ("REIT") under the larger United Development Funding ("UDF") umbrella. The Company originates, purchases, participates in, and holds for investment secured loans made for the acquisition and development of real property.
The shareholder class action complaint alleges that UDF IV and certain of its executive officers made a series of false and misleading statements during the Class Period, and failed to disclose material adverse facts about the Company's business, operations, and prospects. Specifically, the defendants are alleged to have made materially false and misleading statements to investors and/or failed to disclose: (1) that subsequent UDF companies provide significant liquidity to earlier vintage UDF companies, allowing them to pay earlier investors; (2) that if the funding mechanism funneling retail capital to the latest UDF company were halted, the earlier UDF companies would not be capable of standing alone, and the entire structure would likely crumble with investors left holding the bag; (3) that UDF IV provided liquidity to UDF I, UMT and UDF III, among other affiliates, further exacerbating the problem and perpetuating the scheme; (4) that, as such, defendants were operating a Ponzi-like real estate investing scheme; (5) that the Company was being investigated by the SEC; and (6) that, as a result of the foregoing, defendants' statements about UDF IV's business, operations, and prospects, were false and misleading and/or lacked a reasonable basis.
On December 10, 2015, a report posted on the Harvest website asserted that companies affiliated with UDF (including UDF IV) exhibit "characteristics emblematic of a Ponzi scheme" as "subsequent UDF companies provide significant liquidity to earlier vintage UDF companies, allowing them to pay earlier investors." The report further stated, among other things, that (i) "[v]isits to actual development sites, which serve as collateral to UDF development loans, show that, in numerous instances, there is no development and the collateral is still non-income producing, raw land 2, 3, 5 (as much as 10) years after loans were issued" and (ii) in November 2015, several UDF entities disclosed that their independent registered public accounting firm, Whitley Penn LLP, declined to stand for reappointment as auditor. On this news, shares of UDF's stock fell $6.05 per share, or more than 35%, to close on December 10, 2015 at $11.15 per share, on heavy trading volume.
Later on December 10, 2015, UDF IV disclosed that it had been "cooperating since April 2014 with a nonpublic fact-finding investigation being conducted by the Staff of the Securities and Exchange Commission (the 'SEC')." On this additional news, shares of the Company's stock declined an additional $2.60 per share, or 23%, to close on December 11, 2015 at $8.55 per share, again on heavy trading volume.
UDF IV shareholders who purchased their securities during the Class Period may, no later than February 19, 2016, petition the Court to be appointed as a lead plaintiff of the class. A lead plaintiff is a representative party who acts on behalf of other class members in directing the litigation. In order to be appointed as a lead plaintiff, the Court must determine that the class member's claim is typical of the claims of other class members, and that the class member will adequately represent the class in the action. Your ability to share in any recovery is not affected by the decision of whether or not to serve as a lead plaintiff.
Kessler Topaz Meltzer & Check prosecutes class actions in state and federal courts throughout the country. Kessler Topaz Meltzer & Check is a driving force behind corporate governance reform, and has recovered billions of dollars on behalf of institutional and individual investors from the United States and around the world. The firm represents investors, consumers and whistleblowers (private citizens who report fraudulent practices against the government and share in the recovery of government dollars). The complaint in this action was not filed by Kessler Topaz Meltzer & Check. For more information about Kessler Topaz Meltzer & Check, or for additional information about participating in this action, please visit www.ktmc.com.
Kessler Topaz Meltzer & Check, LLP
Darren J. Check, Esq.
D. Seamus Kaskela, Esq.
Adrienne O. Bell, Esq.
280 King of Prussia Road
Radnor, PA 19087
SOURCE Kessler Topaz Meltzer & Check, LLP