Soreide Law Group is investigating potential investor claims that may involve sales practice violations by securities brokers and financial advisors. One investment that has raised significant concern is United Development Funding IV (UDF IV), a non-traded real estate investment trust. This investment was originally sold as a way to provide stable income and long-term gains, but troubling information has since come to light. The sections below outline what investors should know.
What is United Development Funding IV?
United Development Funding IV is a Maryland-based real estate investment trust created with the goal of generating current interest income and future profits through real estate-related investments. The fund primarily focused on secured loans and interests in residential property development.
Shares of UDF IV were sold to investors at $20 per share. As a non-traded REIT, the investment was not listed on an exchange, making it difficult for investors to sell or liquidate shares except under limited circumstances. Like other non-traded REITs, this structure was promoted as a way to participate in real estate development without direct ownership, but it came with restrictions and potential liquidity challenges.
Concerns About United Development Funding IV
Over the past decade, UDF IV has allegedly been the subject of various controversies and regulatory attention. In 2016, the investment was reportedly delisted from NASDAQ after the company was said to have failed to file required annual and quarterly reports with the Securities and Exchange Commission. That same year, it has been claimed that federal agents executed a raid on the company’s offices in Texas as part of what was described as a grand jury investigation. These reports appeared to raise questions about transparency and management practices.
Some parties have alleged that the company was using new investor funds to pay earlier investors. The company has publicly denied these allegations, but they nevertheless reportedly led to years of litigation and public scrutiny.
More recently, in early 2025, UDF IV shareholders were reported to have approved a merger with Ready Capital Corporation (NYSE: RC). While this transaction has been portrayed by some observers as a possible exit path for certain investors, it has also been suggested that it may not offset the financial losses that many investors allegedly experienced, particularly those who purchased shares at the original $20 offering price. The long history of reported investigations, lawsuits, and financial reporting disputes has left some investors claiming that they were not adequately informed of the potential risks.
Sales Practice Violations
Broker-dealers and investment advisors are legally obligated to recommend only investments that are suitable for their clients. Suitability takes into account a client’s age, income, financial goals, investment experience, and risk tolerance. Unfortunately, in some cases involving UDF IV, investors may have been exposed to improper sales practices, including:
- Recommending an illiquid and high-risk investment to clients who needed access to their funds
- Misrepresenting or failing to fully disclose the risks tied to non-traded REITs
- Concentrating too much of a client’s portfolio in one speculative product
- Overlooking the history of regulatory actions and investigations connected to the company
When these types of issues occur, investors may have legal options to pursue recovery. One common avenue is filing a claim through the Financial Industry Regulatory Authority (FINRA) arbitration forum, which provides a process to seek damages from the brokerage firm that recommended the investment.
Did You Sustain Losses by Investing in United Development Funding IV?
Did you experience losses because of investing in United Development Funding IV (UDF IV) as a result of recommendations from your financial advisor or securities broker? If so, you may be entitled to pursue recovery. Contact Soreide Law Group online or call (888) 760-6552 to speak with a securities attorney about your potential claim.
Specifically, Soreide Law Group represents investors nationwide and has successfully recovered losses for clients in a wide range of cases. The firm works on a contingency fee basis and advances all costs, meaning you pay nothing unless there is a financial recovery. If you invested in UDF IV and believe your broker misrepresented the risks or failed to act in your best interests, now is the time to explore your legal options.