The Haselkorn & Thibaut, a nationwide investment fraud law firm, is investigating potential sales practice violations by financial advisors who were recommending Colony Credit Real Estate (NYSE: CLNC) and other real estate investments sold to investors.
Looking back CLNC was trading in general in the $13.00 to over $15.00/share range in the second half of 2016, through 2017, 2018, 2019 and continued on that trend into early March 2020. For early 2020, CLNC was trading near $13.00/share, but is recently trading in the $3.50/share range, down over -70% Year to date.
Colony Credit Real Estate, Inc. (NYSE: CLNC) operates as a commercial real estate (CRE) credit real estate investment trust in the United States. It focuses on originating, acquiring, financing, and managing a portfolio of CRE senior mortgage loans, mezzanine loans, preferred equity, debt securities, and net leased properties. The company qualifies as a real estate investment trust for federal income tax purposes. It generally would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders. The company was formerly known as Colony NorthStar Credit Real Estate, Inc. and changed its name to Colony Credit Real Estate (CLNC) in June 2018. Colony Credit Real Estate, Inc. was founded in 2017 and is headquartered in Los Angeles, California.
Colony Credit Real Estate Lawsuit (CLNC)
The Haselkorn & Thibaut, P.A. law firm is a nationwide investment fraud law firm (www.investmentfraudlawyers.com) investigating potential sales practice violations by financial advisors who were recommending CLNC stock and many similar real estate-related investments sold to investors.
For investors, this is a particularly tough blow as these are the types of investments that were often recommended by financial advisors to clients who were looking for income in their portfolios (often retirees or similarly conservative investors). This was likely a recommendation that was expected to be low volatility and fairly conservative, now investors are faced with substantial losses as a result of a level of risk to their original investment principal that was probably never properly disclosed (if it was ever disclosed at all) by their financial advisors.
As some strategies are leveraged in the hopes of increasing potential returns, they also increased the level of risk, and some investors may not have been advised of those potential risks as well. Although Financial advisors may claim that these were unforeseen market events, the reality is that these are similar risks to those experienced in the 2008-2009 financial crisis. These potential risks were material risks that should have been properly disclosed to clients before recommending these investments individually or as part of a portfolio or investment strategy.
Many of these investments were sold by financial advisors without proper risk disclosures, as these are considered very risky and complex (some even speculative because of the leverage) securities. In cases where these were recommended to retirees or similar conservative income-seeking investors there is the potential for sales practice abuse as a result of misrepresentations, but more often as a result of omissions of material fact, or due to a lack of proper supervision.
Investors Seeking to Recover CLNC Stock Losses
For some investors, a private FINRA arbitration customer dispute enables them to bring a claim and potentially recoup their CLNC stock investment losses. These customer disputes typically involve only paper discovery and no depositions, and they are generally faster and more efficient compared to traditional court litigation, as they provide a private forum to resolve disputes more quickly and efficiently.