NEW YORK, Dec. 23, 2015 (GLOBE NEWSWIRE) -- Gainey McKenna & Egleston announces that a class action lawsuit has been filed in the United States District Court for the Northern District of Texas on behalf of a class (the "Class") of 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 was published on the Harvest Exchange alleging that the Company was operating a "Ponzi-like real estate scheme," whereby successive UDF entities would raise capital to bail out prior vintages. On this news, the Company's shares dropped $6.05, or more than 35%, to close at $11.15 on December 10, 2015.
On the same day, after the market closed, the Company announced that UDF III and UDF IV "have been cooperating since April 2014 with a nonpublic fact-finding investigation being conducted by the Staff of the Securities and Exchange Commission." On this news, the Company' shares collapsed another $2.60, or 23.3%, to close at $8.55 per share on December 11, 2015, thereby damaging investors.
The complaint alleges that UDF IV and certain of its officers with violations of the federal securities laws. Specifically, the complaint charges that throughout the Class Period, defendants failed to disclose: (1) that later-created UDF companies provided essential liquidity to earlier established UDF companies, allowing them to pay earlier investors; (2) that if the funding mechanism channeling capital to the latest UDF company stopped, the earlier UDF companies would not be able to stand alone, and the entire organization would likely collapse; (3) that UDF IV provided liquidity to UDF I, UMT and UDF III, among other affiliates, further worsening the problem; (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.
If you wish to serve as lead plaintiff, you must move the Court no later than February 19, 2016. A lead plaintiff is a representative party acting on behalf of other class members in directing the litigation. If you wish to join the litigation, or to discuss your rights or interests regarding this class action, please contact Thomas J. McKenna, Esq. or Gregory M. Egleston, Esq. of Gainey McKenna & Egleston at (212) 983-1300, or via e-mail at tjmckenna@gme-law.com or gegleston@gme-law.com.
Please visit our website at http://www.gme-law.com for more information about the firm.