NEW YORK, Feb. 08, 2016 (GLOBE NEWSWIRE) -- Pomerantz LLP announces that a class action lawsuit has been filed against United Development Funding IV (“UDF IV” or the “Company”) (NASDAQ:UDF) and certain of its officers. The class action, filed in United States District Court, Northern District of Texas, Dallas Division, and docketed under 15-cv-04055, is on behalf of a class consisting of all persons or entities who purchased UDF IV securities between June 4, 2014 and December 10, 2015 inclusive (the “Class Period”). This class action seeks to recover damages against Defendants for alleged violations of the federal securities laws under the Securities Exchange Act of 1934 (the “Exchange Act”).
If you are a shareholder who purchased UDF IV securities during the Class Period, you have until February 19, 2016 to ask the Court to appoint you as Lead Plaintiff for the class. A copy of the Complaint can be obtained at www.pomerantzlaw.com. To discuss this action, contact Robert S. Willoughby at rswilloughby@pomlaw.com or 888.476.6529 (or 888.4-POMLAW), toll free, ext. 9980. Those who inquire by e-mail are encouraged to include their mailing address, telephone number, and number of shares purchased.
UDF IV is a real estate investment trust (“REIT”) under the larger United Development Funding (“UDF”) umbrella. The Company primarily originates, purchases, participates in, and holds for investment secured loans made directly by the Company or indirectly through its affiliates to persons and entities for the acquisition and development of parcels of real property as single-family residential lots or mixed-use master planned residential communities, for the construction of single-family homes and for completed model homes.
The Complaint alleges that throughout the Class Period, Defendants made false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants made false and/or misleading statements 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, an anonymous author under the pseudonym “Investor for Truth” published a report on UDF IV on the Harvest Exchange, an investment website. The report alleges that the Company was engaging in “Ponzi-like real estate scheme.”
The report also alleges that “UDF IV has since provided liquidity to UDF I, UMT and UDF III, among other affiliates, further exacerbating the problem and perpetuating the scheme” and that “Visits 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.” Finally, the report notes that UDF IV’s independent registered public accounting firm, Whitley Penn LLP, declined on November 19, 2015, to stand for reappointment as the auditor for the Company.
On this news, shares of UDF IV fell $6.05 per share, or more than 35%, to close at $11.15 on December 10, 2015, on unusually heavy trading volume.
Subsequently, on December 10, after the close of trading, the Company issued a press release disclosing that it has been cooperating since April 2014 with a nonpublic fact-finding investigation being conducted by the Staff of the SEC.
On this news, shares of UDF IV fell $2.60 per share, or more than 23%, to close at $8.55 on December 11, 2015, on unusually heavy trading volume.
The Pomerantz Firm, with offices in New York, Chicago, Florida, and Los Angeles, is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, the Pomerantz Firm pioneered the field of securities class actions. Today, more than 70 years later, the Pomerantz Firm continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered numerous multimillion-dollar damages awards on behalf of class members. See www.pomerantzlaw.com