December 23, 2015
Bernstein Liebhard LLP today announced that a securities class action has been filed in the United States District Court for the Northern District of Texas on behalf of a class (the “Class”), consisting of all purchasers of United Development Funding IV (“UDF IV”) or the “Company”) (NASDAQ: UDF) common shares between June 4, 2014 and December 10, 2015, inclusive (the “Class Period”).
On December 10, 2015, a report on UDF IV entitled “A Texas Sized Scheme” was published on the website Harvest Exchange. Among other things, the report asserted that the United Development umbrella, which operates publicly listed and public non-traded REITs, “exhibits characteristics emblematic of a Ponzi scheme.” Specifically, according to the report, UDF IV has used money raised from retail investors to provide liquidity for UDF I and UDF III – “prior vintages” of United Development.
Following the publication of the report, the price of UDF IV stock plummeted over 35%, to close at $11.15 on December 10, 2015.
On the morning of December 11, 2015, a follow-up report was published on Harvest Exchange entitled “One Example of Many: How The Scheme Works, from One UDF Fund to the Next” in which the author claimed to prove that UDF IV has been providing liquidity to its affiliates. On this news, the Company’s shares plummeted another $2.60, or 23.3%, to close at $8.55 per share on December 11, 2015.
The complaint charges UDF IV and certain of its officers with violations of the federal securities laws. Specifically, the complaint alleges that throughout the Class Period, Defendants failed to disclose that: (1) subsequent UDF companies provide significant liquidity to earlier vintage UDF companies, allowing them to pay earlier investors; (2) 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) UDF IV provided liquidity to UDF I, UMT and UDF III, among other affiliates, further exacerbating the problem and perpetuating the scheme; (4) as such, Defendants were operating a Ponzi-like real estate investing scheme; and that (5) the Company was being investigated by the SEC.
Plaintiffs seek to recover damages on behalf of all Class members who invested in UDF IV common shares during the Class Period. If you invested in UDF IV shares as described above, and lost money on the transactions, you may wish to join in this action to serve as lead plaintiff. In order to do so, you must meet certain requirements set forth in the applicable law and file appropriate papers no later than February 19, 2016.
A “lead plaintiff” is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed 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. Under certain circumstances, one or more class members may together serve as lead plaintiff. Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff. You may retain Bernstein Liebhard LLP, or other counsel of your choice, to serve as your counsel in this action.
If you are interested in discussing your rights as a UDF IV shareholder and/or have information relating to the matter, please contact Joseph R. Seidman, Jr. at (877) 779-1414 or firstname.lastname@example.org.
Bernstein Liebhard LLP has pursued hundreds of securities, consumer and shareholder rights cases and recovered over $3.5 billion for its clients. The National Law Journal has recognized Bernstein Liebhard for twelve consecutive years as one of the top plaintiffs’ firms in the country.
You can obtain a copy of the complaint from the clerk of the court for the United States District Court for the Northern District of Texas.