MSC Income Fund: Shareholders may have Claims
Are you concerned about your investment losses in MSC Income Fund? If so, The White Law Group may be able to help you recover your losses by filing a FINRA Dispute Resolution claim against the brokerage firm that sold you the investment.
July 30, 2024 – MSC Income Fund Inc., formerly HMS Income Fund, is preparing to publicly list its common stock by filing a preliminary proxy statement with the SEC. The proposals include amending its charter to prepare for listing, adjusting management fees, and authorizing share sales below net asset value. Managed by Main Street Capital Corporation’s subsidiary since 2020, MSC specializes in providing financing to middle-market companies for various purposes like management buyouts and growth.
The Fund’s investment objective is to generate both current income and capital appreciation for its investors, according to its website. The Fund’s portfolio investments are typically made to support management buyouts, recapitalizations, growth financings, refinancing and acquisitions of companies that operate in diverse industry sectors.
Decrease in DRP Price and Net Asset Value (NAV)
The company estimates its current Net Asset Value is $7.61 per share, as of March 2023.
According to SEC filings on April 8, 2020, the fund announced a 14.8% decrease in the price at which it issued shares under its distribution reinvestment plan from $7.80 to $6.65 as of April 1, 2020. This comes after a similar decrease in December 2019, from $8.00 to $7.95.
Declining Secondary Sales Price
Lodas Markets, a secondary market for alternative investments, reportedly sold shares of MSC Income Fund in July 2024 for $5.70/share. This many indicate losses for investors as the original offering price was $10.00 per share.
Distributions Suspended
As previously reported, the Board voted to suspend all distributions to the fund’s stockholders in July 2020, to preserve financial flexibility and liquidity, citing market events caused by the global outbreak of COVID-19 and its impact on the financial markets in U.S. and global economies.
BDC – MSC Income Fund
A Business Development Company (“BDC”) invests in small and mid-sized businesses. Investors can buy shares in a BDC, and the money from their investments is used to fund the businesses. In turn, investors can profit from dividends paid on their investments, or, in some cases, the sale of their shares. The creation of BDCs was meant to spur investment in smaller companies that couldn’t attract traditional forms of capital.
Business Development Companies operate much in the same way as a non-traded REIT (Real Estate Investment Trust) and have the same risks for investors such as high-risk, high commissions, and lack of liquidity.
Suitable Investment for you?
The White Law Group has represented a number of investors over the last few years in non-traded REITs and BDCs. Unfortunately, unscrupulous financial advisors will push these products to maximize their own commissions. The firm is investigating the liability that FINRA registered brokerage firms may have for improperly recommending high-risk business development companies, like MSC Income Fund to investors.
Broker dealers are required to perform adequate due diligence on any investment they recommend and to ensure that all recommendations are suitable for the investor. Firms that fail to do so, may be held responsible for any losses in a FINRA arbitration claim.
Class Action vs. Individual FINRA Arbitration Lawsuit
You may wonder whether a large class action lawsuit is a better litigation option than an individual FINRA arbitration case. The answer depends on many factors, but typically if the loss sustained is large (say larger than $100,000), an individual arbitration claim is likely a better option. Class actions as a recovery option are more appropriate for grouping large numbers of individuals who have small claims – too small to generally pursue individually.
If you have concerns regarding your investment in MSC Income Fund Inc. and would like to speak with a securities attorney about your options, please call The White Law Group at 888-637-5510.
The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois.
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