Sierra Income Corporation Distributions Suspended

The board of another non-traded business development company (BDC), Sierra Income Corporation, has suspended monthly distributions to their shareholders.  The company claimed that the suspension is temporary and would enhance their financial flexibility. This included both cash distributions and distribution reinvestment plans.
According to Sierra Income Corporation, “The company believes that it is in the best long-term interests of its shareholders to maintain a conservative approach to its distribution policy during this volatile economic environment.”
On May 5, 2020, Sierra Income Corporation announced the merger agreement between Sierra and Medley Capital (MCC) had ended stating that “the changed circumstances and the unpredictable economic conditions resulting from the global health crisis caused by the coronavirus (COVID-19) pandemic.”
According to Yahoo Finance, Sierra Income Corporation is a non-traded business development company (BDC) that invests primarily in first lien senior secured debt, second lien secured debt and, to a lesser extent, subordinated debt of middle market companies in a broad range of industries with annual revenue between $50 million and $1 billion. Sierra’s investment objective is to generate current income, and to a lesser extent, long-term capital appreciation. Sierra Income Corporation is externally managed by SIC Advisors LLC, which is an investment adviser registered under the Investment Advisers Act of 1940, as amended.
Broker/dealers and financial advisors have a responsibility to their clients to explain the risks, expenses, high commissions and fees associated with these types of investments.  Many investors purchase these investments because of the distributions, but are not always made aware by their brokers that the distributions can suddenly end.  Also, the broker must understand the level of risk the client is dealing with when it comes to this type of investment.  Someone who has a low or even moderate portfolio with retirement in mind, may not benefit from this type of investment.  Retirement funds are not easily replaced.
If your broker failed to disclose the risks associated with Sierra Income Corporation and you’ve suffered financial losses, contact Soreide Law Group and speak to an experienced securities lawyer regarding the possible recovery of your investment losses through a FINRA arbitration at:  888-760-6552.
Soreide Law Group works on a contingency fee and represents our clients nationwide before FINRA.