National investment loss lawyers KlaymanToskes is investigating the Hatteras Core Alternatives Fund and financial advisors who unsuitably recommended investments in Hatteras Funds to their customers. Our law firm believes many investors may have been misled regarding the risks and liquidity issues associated with Hatteras Investment Partners’ investment offerings.
KlaymanToskes is currently investigating the following Hatteras Investment Partners investment offerings:
If your financial advisor recommended unsuitable investments in Hatteras Funds, misrepresented material facts related to the risks of your investment, or disregarded your risk-tolerance when making investment recommendations, you may be entitled to a financial recovery through FINRA arbitration.
Contact securities attorney Steven D. Toskes to discuss your recovery options at (888) 997-9956 or investigations@klaymantoskes.com for a free and confidential consultation. We do not collect attorney’s fees unless we are able to obtain a financial recovery for you.
On December 7, 2021, the Hatteras Master Fund made a strategic decision to exchange its interests in all underlying assets for Beneficient Preferred Series B-2 Unit Accounts. Following this exchange, the Hatteras Master Fund held a 44.4% stake in The Beneficient Company Group’s Preferred Series B-2 Units.
The Beneficient Company Group, L.P., a Delaware limited partnership, is tied to GWG Holdings. In April 2022 GWG Holdings, Inc. filed for Chapter 11 bankruptcy (Case No. 22-90032), suspending their monthly dividends of GWG L Bonds, and leaving investors without access to their principal. Significant changes occurred on June 8, 2023, when Beneficient went public and began trading on the Nasdaq under the ticker symbol BENF. During this transition, the Preferred Series B-2 Units were converted into common stock at an initial value of $8.00 per share.
The value of Beneficient’s common stock has since dropped dramatically, partly due to the impact of GWG’s bankruptcy, and is now trading at only $2 per share. This steep decline has resulted in substantial financial losses for Hatteras Fund investors. Many investors only became aware of these losses when they received their mailed statements in September 2023, revealing the true extent of their financial loss.
High Volatility and Financial Risk: The Hatteras Core Alternatives Fund is highly volatile and carries significant fees for investors. Investing in the fund involves a high degree of risk, including the potential loss of the entire investment. Further, the underlying funds may engage in speculative investment strategies such as leverage, short sales, and derivatives transactions, increasing the risk of losses.
Limited Liquidity: The Hatteras Core Alternative Fund operates through a two-step investment process. The Hatteras Core Alternative Fund invests in a larger Hatteras Master Fund, which in turn invests in various private equity funds. This structure inherently limits liquidity because private equity investments are typically long-term and not easily sold or traded. Additionally, the risks associated with these underlying investments may not have been fully disclosed to investors.
Dual Layer of Fees: By investing indirectly through the Hatteras Fund, investors are subjected to a dual layer of fees: one at the fund level and another at the underlying fund level. Total annual expenses for the Hatteras Core Alternative Fund exceed 6%, and expenses for the Hatteras Master Fund are over 1.4%.
Potential conflicts of interest may arise when issuers incentivize brokers/investment advisors with substantial commissions to promote their financial products. A problem often associated with private placement investment recommendations is the high sales commissions brokers typically earn for selling these investments. A representative that recommends investments for the purpose of being compensated through increased commissions, and enriches themselves rather than benefiting the client, is violating securities laws.
To recover investment losses, you do not go through the traditional court system with a lawsuit. The only remedy is through a FINRA arbitration, a specific process designed for these types of disputes. This process involves presenting your case to a panel set by the Financial Industry Regulatory Authority (FINRA), not a courtroom. This approach is streamlined and focused on investment disputes, making it a suitable and effective way for investors to seek compensation for losses caused by financial advisors or brokerage firms.
FINRA (the Financial Industry Regulatory Authority) is a self-regulatory organization that oversees brokers and brokerages. In the event of a dispute between an investor and their financial advisor, investors can choose to file a FINRA arbitration claim. FINRA is overseen by the Securities and Exchange Commission (“SEC”).
The arbitration process is designed to be much faster than the court system and allows both parties to present their case before a panel of arbitrators. The arbitrators will then decide how to resolve the dispute, including ordering the advisor to pay damages for any losses suffered by the investor.
If you suffered losses in Hatteras Funds, or any other investments, contact attorney Steven D. Toskes, at 888-997-9956 or by email at investigations@klaymantoskes.com to discuss recovery options.
As an investor, there are signs that you should look out for if you believe you have a claim against your brokerage firm/financial advisor for unsuitable investment recommendations in Hatteras Funds. These signs could potentially indicate misconduct, negligence, or investment fraud. Investors are encouraged to contact our firm immediately if you have experienced any of the following:
Some investors have close relationships with their brokers due to the time and trust built over the course of their investment relationship. However, it is crucial to remember that financial decisions should be based on careful analysis and due diligence rather than solely relying on personal relationships.
Engaging the services of an experienced securities attorney to evaluate your specific circumstances is strongly advised. At KlaymanToskes, our team of experienced securities attorneys has a deep understanding of this complex area of law, allowing us to provide invaluable insight and tailored guidance that directly addresses your individual needs.
If you purchased unsuitable Hatteras Funds through your financial advisor/brokerage firm, and suffered significant losses, contact KlaymanToskes at 888-997-9956 or fill out a short contact form for a free and confidential consultation.