private placements

Securities fraud attorneys are currently investigating claims on behalf of investors who suffered significant losses because of their broker or advisor’s unsuitable recommendation of private placements. In September, a new investor alert was issued by the Financial Industry Regulatory Authority (FINRA) titled “Private Placements — Evaluate the Risks Before Placing Them in Your Portfolio.” Unfortunately, many individuals have already suffered significant losses because they trusted the unsuitable recommendation of their investment adviser.

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A private placement, as defined by FINRA, is “an offering of a company’s securities that is not registered with the Securities and Exchange Commission (SEC) and is not offered to the public at large.” According to stock fraud lawyers, private placements are generally only suitable for accredited investors. Accredited investors have a net worth exceeding $1,000,000 and an income of at least $200,000 (individually) or $300,000 (jointly with spouse).

“Investors should understand that many private placement securities are issued by companies that are not required to file financial reports, and investors may have problems finding out how the company is doing,” FINRA officials note. “Given the risks and liquidity issues, investors should carefully assess how private placements fit in with other investments they hold before investing.”

Stock fraud lawyers are currently investigating potential claims on behalf of investors who suffered losses as a result of their investment in Woodlark Capital. Woodlark Capital LLC is, according to its Securities and Exchange Commission Form D filing, a real estate company based in New York. In 2007, the company applied for a Form D Notice of Sale of Securities in order to generate capital. Certain Financial Industry Regulatory Authority (FINRA)-registered broker-dealers offered and sold these private placements.

Woodlark Capital Investment Private Placement Investors Could Recover Losses

According to securities arbitration lawyers, private placements allow smaller companies to use the sale of debt securities or equities to raise capital without it becoming necessary for them to register these securities with the Securities and Exchange Commission. Because these investments are typically more complicated and carry more risk than other traditional investments, they are usually only suitable for sophisticated, high-net-worth investors.

Stock fraud lawyers say that because the creation and sale of private placements often carry high commissions, these investments continue to be pushed by brokerage firms despite the fact that they may be unsuitable for investors. FINRA rules have established that brokers and firms have an obligation to fully disclose all the risks of a given investment when making recommendations, and those recommendations must be suitable for the individual investor receiving the recommendation given their age, investment objectives and risk tolerance.

Articles Tagged with private placements

Investors Could Recover Losses for Unsuitable Recommendation of Private Placements

Woodlark Capital Investment Private Placement Investors Could Recover Losses