With the rise of alternative investments, such as structured products, oil & gas investments, ETFs and real estate investment trusts (REITS) regulators have issued many investor alerts because brokers have misrepresented the risks associated with such products and many unsuspecting investors have lost money as a result.
Private Placements
Each year, companies raise billions of dollars selling securities in non-public offerings that are exempt from registration under the federal securities laws. These offerings are known as private placements. Investing in private placements is risky and can tie up investor’s funds for a significant amount of time. Sales practice abuses relating to private placements often result from inaccurate and misleading sales materials, including omissions of necessary information, and the failure of brokerage firms to conduct adequate investigations into such products prior to making recommendations to their clients to invest.
Simply stated, a private placement 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. Many private placements are offered pursuant to Regulation D of the Securities Act of 1933, which specifies the amount of money that can be raised and the type of investor that can be solicited to participate in the offering.
Alternative Investments
An alternative investment is an investment that is not one of the three traditional asset types (stocks, bonds and cash). Most alternative investment assets are held by institutional investors or accredited, high-net-worth individuals because of their complex nature, limited regulations and relative lack of liquidity. Alternative investments include hedge funds, managed futures, real estate, commodities and derivatives contracts.
Many alternative investments also have high minimum investments and fee structures compared to mutual funds and ETFs. While they are subject to less regulation, they also have less opportunity to publish verifiable performance data and advertise to potential investors.
Hanley Law is dedicated to helping investors who are victims of unscrupulous sales practices relating to alternative investment and private placements. If you lost money in an alternative investment or private placement because the product was unsuitable for you given your age, financial situation, and other factors, you may be able to recover your financial losses. Contact us today for a free initial consultation.