Our law firm is handling claims against Financial Industry Regulatory Authority (“FINRA”) brokerage firms who solicited customers to purchase a private placement called LaeRoc Income Funds, LP, including LaeRoc 2002 Income Fund and LaeRoc 2005-2006 Income Fund. The law firm’s investigation shows that Commonwealth Financial Network and LPL Financial sold the Fund to their customers.
According to LaeRoc Funds’ website, it is a real estate investment firm managing over $650 million in assets in the last 23 years. The Company focuses on income producing properties in the western U.S. with a concentration in southern California.
The LaeRoc 2005-2006 Income Fund, LP is currently in the process of trying to raise another $12 million to $15 million to pay off at least $49 million of debt. This cash call is often a negative sign for the Fund’s investors. Investors had until July 30 to respond to the cash call. According to Investment News, “The Fund’s lenders have said that they will foreclose on one of its holdings, the Country Club Plaza shopping center in Sacramento, Calif., by the end of the year if they can’t raise enough money.” The LaeRoc Fund has paid more than $180 million to buy eight properties and owes $105 million in mortgage debt.
Investors have reported that LaeRoc Income Funds were represented as being conservative, fixed income investments. Accordingly, our law firm is investigating the manner in which the Funds were marketed, and whether brokerage firms mis-marketed the products and/or failed to disclose the entirety of the risks associated with LaeRoc Income Funds.
Under FINRA Rules, brokerage firms have an obligation to conduct a reasonable investigation of the issuer and the securities they recommend in offerings made under the SEC’s Regulation D under the Securities Act of 1933, also known as private placements. The LaeRoc Income Funds are private placements. Regulation D provides exemptions from the registration requirements of Section 5 under the Act. Regulation D transactions, however, are not exempt from the antifraud provisions of the federal securities laws. A brokerage firm has a duty—enforceable under federal securities laws and FINRA rules—to conduct a reasonable investigation of securities that it recommends, including those sold in a Regulation D offering. Failure to comply with this duty gives rise to an individual cause of action against the brokerage firm who sold the product to the customer.
Investors who purchased LaeRoc Income Funds from a full-service brokerage firm and sustained significant losses can contact our law firm to explore their legal rights and options.