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News articles report that Super Micro Computer stock (NASDAQ: SMCI) was facing the possibility of being delisted from the Nasdaq before hiring a new firm of auditors and presenting a plan to file its Annual Report in early 2025. Investors may have legal claims arising from the circumstances leading to this near-delisting, which reportedly include related party transactions that were not fully disclosed in the Company’s publicly reported financials.

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Super Micro Computer is a $35 billion high-performance server and storage solutions manufacturer founded in 1993 and headquartered in San Jose, California, in the heart of Silicon Valley. The company originally listed on Nasdaq via a $64 million Initial Public Offering in 2007.  Super Micro Computer shares have significantly dropped in value in recent months, although they have recently rebounded to some extent.  The Company’s shares peaked in value at $122.90 a share in March 2024 and have since traded at prices as low as below $20 a share.

Super Micro Computer is reportedly a “Rack-Scale Total IT Solutions provider”, offering servers, storage systems, switches, software and global support services. It sells into the following segments: enterprise data centers, cloud computing, artificial intelligence, 5G, and edge computing. Servers and storage systems reportedly accounted for 92% of the company’s net sales in 2023.

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Investors in so-called “auto-callable” notes links to stocks may have FINRA arbitration claims, if their investment was recommended by a stockbroker or financial advisor who lacked a reasonable basis for the recommendation, or if the nature and risks of the investment were misrepresented.

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“Auto-callable” notes are structured products that are  often sold as higher-yielding alternatives to bonds, which obscures the fact that investors’ potential losses are much larger and much more likely to occur than in a bond investment.  But during the years 2020-22, when record low interest rates prevailed, sales of “auto-callable” notes skyrocketed, peaking at $40.1 billion in 2021.   Desperate for income, investors were often sold these notes based on a sales presentation that focused on yields approaching 10% a year.

But these high stated yields can be misleading for a simple reason- the investor actually receives the stated and advertised yield only under certain conditions.   If the price of the referenced stock rises  above the referenced stocks price at the time of issuance, the notes are “auto-called” and the income yield ceases. By called, it is meant that the note is bought back from the investor by issuer.  Once the note is called the investor receives no more distributions and essentially breaks even on the investment, except for any distributions that he or she may have received to date.

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Investors in Healthcare Trust, Inc. (“HTI”), which was formerly known as ARC Healthcare Trust II, may have FINRA arbitration claims, if their investment was recommended by a financial advisor who lacked a reasonable basis for the recommendation, or if the nature of the investment was misrepresented by the stockbroker or advisor.  Investors may also have claims if a broker or advisor has recommended HTI as part of an investment portfolio that is excessively concentrated in illiquid alternative investments.

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HTI, a publicly registered, non-traded real estate investment trust or “REIT”,  recently announced that it intends to transition to self-management in anticipation of a potential future listing of its common stock on a national securities exchange. The REIT expects the internalization to close no later than the fourth quarter of 2024.

HTI reportedly acquires, owns, and manages a diversified portfolio of healthcare-related real estate, focused on medical office and other healthcare-related buildings, and senior housing operating properties. As of March 31, 2024, the company reportedly owned 208 properties located in 33 states and comprised of 9.1 million rentable square feet. Its total assets were approximately $2.13 billion, about a 1.68% decrease from the previous year’s approximate $2.17 billion.

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Investors in Moody National REIT II (“Moody II”) may have FINRA arbitration claims, if their investment was recommended by a stockbroker or financial advisor who lacked a reasonable basis for the recommendation, or if the nature of the investment was misrepresented.

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Moody II shares have continued to drop in value.  According to an update provided by the REIT on June 6, 2024. the REIT reported a decline in Net Asset Value (“NAV”) per share from $19.45 as of December 31, 2022, to $17.25 as of December 31, 2023.   However, publicly traded REITs typically trade at a discount to NAV, meaning a they are bought and sold at a lower price, and non-traded REITs like Moody II often can be sold only at prices far below NAV, if at all.  Moody II shares have reportedly traded at prices as low as $9.00 a share in private transactions.  Shares were originally sold to investors at a price of $25/share.

Concerningly, Moody II also announced that it will be impacted by debt maturities in 2024 because of anticipated increases in interest rates of approximately 300 to 500 basis points on the debts that have to be refinanced.  Approximately 38% of the REIT’s $228 million in outstanding indebtedness, as of March 31, 2024, is reportedly scheduled to mature in 2024.  Moody II also announced earlier this year that it was unable to file its Annual Report on Form 10-K for the period ended December 31, 2023 with the U.S. Securities and Exchange Commission by the prescribed filing deadline (April 1, 2024) without unreasonable effort or expense because the Company’s independent auditors, require additional time to complete an audit.

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Investors in private placement securities sold by brokerage firm Herbert J Sims & Co., a/k/a HJ Sims may have potential arbitration claims, if their investment was recommended by a financial advisor who lacked a reasonable basis for the recommendation, or if the nature of the investment was misrepresented by the stockbroker or advisor.

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HJ Sims has reportedly offered to investors a number of private placement investments that the firm itself structures and establishes.  These so called Regulation D private or “Reg D” private placement offerings sold by HJ Sims have reportedly totaled about $2.2B billion in principal value sold.  Reportedly HJ Sims sold 84 separate private placements.  Some of the private placements sold by HJ Sims are the following: 

  • Fountains Acquisition Finance
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Investors in Sila Realty Trust Inc. (“Sila”), a publicly registered, non-traded real estate investment trust (formerly known as Carter Validus Mission Critical REIT II) may have FINRA arbitration claims, if their investment was recommended by a financial advisor who lacked a reasonable basis for the recommendation, or if the nature of the investment was misrepresented by the stockbroker or advisor.

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Sila is a net lease real estate investment trust with a focus on healthcare assets.  Sila recently reported that it has received approval to list its common stock on the New York Stock Exchange with trading expected to commence on the NYSE on June 13, 2024, under the ticker symbol “SILA.”

Sila  merged with another REIT known as with Carter Validus Mission Critical REIT Inc. in late 2019.   As of 2021, Sila reportedly owned 153 real estate properties, consisting of 29 data centers and 124 healthcare properties located in 70 markets across the United States with a total purchase price of approximately $3.2 billion, including capital expenditures on development properties placed into service.  Sila was incorporated on January 11, 2013 as a Maryland corporation that elected to be taxed as a real estate investment trust (REIT).

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Investors in American Healthcare REIT (as referred to below as “AHR”) may have FINRA arbitration claims, if their initial investment in Griffin-American Healthcare REIT III, Griffin-American Healthcare REIT IV, or American Healthcare Investors was recommended by a financial advisor who lacked a reasonable basis for the recommendation, or if the nature of the investment was misrepresented by the stockbroker or advisor.

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AHR, a non-traded real estate investment trust formed by the 2021 merger of Griffin-American Healthcare REIT III, Griffin-American Healthcare REIT IV, and American Healthcare Investors, is reportedly seeking to raise about $700 million in an initial public offering of its shares, as reported by Bloomberg.  If the plan moves forward, AHR would sell newly issued shares to the public and its existing shares would also later become tradeable on the New York stock Exchange under the ticker symbol “AHR”.

AHR acquires, owns, and operates a portfolio of properties such as medical office buildings, senior housing, skilled nursing facilities and hospitals, according to public filings with the Securities and Exchange Commission. It reportedly owns nearly 300 properties in states including Indiana, Michigan, Missouri, Ohio and Texas, and values its assets at about $4.6 billion as of Sept. 30, 2023.

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Investors in Lodging Fund REIT III Inc. (referred to below as referred to below as “Lodging Fund III”) may have FINRA arbitration claims, if their investment was recommended by a financial advisor who lacked a reasonable basis for the recommendation, or if the nature of the investment was misrepresented by the stockbroker or advisor.

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When it was established in 2018, Lodging Fund III offered $100 million in common stock to investors, reportedly raising $75.3 million in proceeds from sales of stock as of the last quarter of 2020,  Lodging Fund REIT III is a Maryland corporation and focuses on holding a diversified portfolio of select service, limited service and extended stay hotels located in the heartland of America.   According to a filing with the Securities and Exchange Commission (“SEC”) by Lodging Fund III, the non-traded REIT has a diversified portfolio that includes “limited service, select service, and extended stay hospitality properties” in the geographic area stretching from the Rockies to the Appalachian Mountains and from Texas to North Dakota.

In a filing with the SEC in late 2023, Lodging Fund III reported that its board of directors had both dismissed Deloitte & Touche LLP (Deloitte) and appointed Marcum LLP to serve as its independent public accounting firm as of October 24, 2023.  Deloitte had served as the REIT’s audit firm for 2020 and 2021 and provided clean audit opinions of the REIT’s financial statements in each year. Concurrent with its dismissal, Deloitte filed a letter with the SEC stating that it had no disagreements with the REIT related to its financial statements, disclosures, practices, or accounting principles.

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The U.S. Securities and Exchange Commission (“SEC”) has alleged that unregistered investment adviser John A. Masanotti, Jr. (“Masanotti”) of Darien, Connecticut and his company, Middlesex Mortgage Group LLC (“MMG”), violated federal law in connection with investments that MMG induced from outside investors, totaling  least $5.9 million, beginning in 2016.  Many of the MMG investors allegedly liquidated securities they held in retirement accounts to invest in the fund.

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The SEC Complaint is accessible here. SEC Complaint

According to the SEC.  MMG and Masanotti allegedly used investor money to make Ponzi-like payments to investors and also used some investor funds for Masanotti’s “extravagant personal expenses.”

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Investors in  CIM Real Estate Finance Trust Inc. (referred to below as referred to below as “CIM REIT ”) may have FINRA arbitration claims, if their investment was recommended by a financial advisor who lacked a reasonable basis for the recommendation, or if the nature of the investment was misrepresented by the stockbroker or advisor.

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CIM REIT, originally sold as  Cole Credit Property Trust IV, originally sold shares to the public for $10 each. Since then, the price of the REIT shares has decreased, reaching an estimated net asset value (NAV) per share of $7.77 as of December 31, 2019 and declining even further at later dates.

Now, an Israel-based investment fund, has made a filing with the Securities and Exchange Commission (“SEC”) to launch an unsolicited tender offer to purchase shares of CIM REIT a publicly registered non-traded real estate investment trust.  The fund previously made a filing with the SEC in April 2023 to launch an unsolicited tender offer. The previous offer included the purchase of up to 22 million shares of CIM Real Estate Finance Trust Inc. for $4.57 per share.  The fund’s current offer is to purchase up to 22 million shares of common stock at a an even lower purchase price equal to $4.21 per share.

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