The Haselkorn & Thibaut, P.A. law firm is a nationwide investment fraud law firm investigating potential sales practice violations by financial advisors who were recommending Redwood Trust, Inc. (NYSE: RWT) and other mortgage-related real estate investment trust (REIT) investments sold to investors.
The recent trading in RWT has been in the $3.20/share range. Looking back, RWT was trading in general over $15.00/share in the second half of 2016 through 2017, 2018, 2019, and continued on that trend into early March 2020. For early 2020, RWT was trading near $17.00/share.
What is Redwood Trust, Inc. – RWT Stock
(Symbol: RWT) together with its subsidiaries, operates as a specialty finance company in the United States. The company operates through two segments, Investment Portfolio and Residential Mortgage Banking. The Investment Portfolio segment offers a portfolio of investments in residential mortgage-backed securities retained from Sequoia securitizations, as well as issued by third parties and other credit risk-related investments; and invests directly in residential mortgage loans.
The Residential Mortgage Banking segment operates a mortgage loan conduit, which acquires residential loans from third-party originators for sale, securitization, or transfer to investment portfolio. This segment also includes derivative financial instruments to manage risks associated with residential loans. The company qualifies as a real estate investment trust (REIT) for federal income tax purposes. As a REIT, it intends to distribute at least 90% of its taxable income as dividends to shareholders. Redwood Trust, Inc. (RWT) was founded in 1994 and is headquartered in Mill Valley, California.
RWT Stock Lawsuit “FINRA”
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 RWT stock and many similar mortgage-related REIT 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 in RWT stock 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 RWT Stock Losses
For some investors, a private FINRA arbitration (similar to a lawsuit) customer dispute enables them to bring a claim and potentially recoup their 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.