Investigation into Cole Creek Investments, L.P. Private Placement
The White Law Group is investigating potential securities claims involving Cole Creek Investments, L.P., a Delaware limited partnership formed in 2021. The investment was structured as a private placement under Regulation D of the Securities Act of 1933.
About the Offering
According to a Form D filing with the Securities and Exchange Commission, the issuer sought to raise approximately $12.8 million in equity securities under Rule 506(b). The offering closed on December 7, 2021, after raising nearly the full amount from 142 investors, with a minimum investment of $10,000. Reported sales commissions totaled more than $1.28 million, in addition to due diligence and managing broker-dealer fees. Further, approximately $2.5 million of proceeds were designated for payments to related parties under a management and consulting agreement. Broker-dealers named in the filing include Dempsey Lord Smith LLC and Capulent, LLC, along with associated registered representatives.
Risks of Private Placements
Private placements such as this one often carry substantial risks for retail investors:
- Illiquidity: These investments are not traded on public exchanges and can be extremely difficult to sell.
- High Fees: Upfront commissions and fees reduce investor returns.
- Speculative Nature: Performance depends on the success of the underlying real estate or business operations.
- Suitability Issues: Brokers sometimes recommend these high-risk offerings to investors who may not fully understand or tolerate the risks.
Broker Duties and Recovery Options
Broker-dealers have a duty to perform due diligence on private placements and to ensure that any recommendation is suitable for their client’s financial profile and objectives. If your financial advisor unsuitably recommended Cole Creek Investments, L.P., you may be entitled to recover investment losses through FINRA arbitration.
Free Consultation with a Securities Attorney
If you have suffered investment losses in Cole Creek Investments, L.P. or another private placement, please call The White Law Group at (888) 637-5510 for a free consultation with a securities attorney.
FAQs
What is a Regulation D offering?
Regulation D allows companies to raise capital through private placements without registering with the SEC. These offerings are generally sold to accredited investors but may carry high risks.
Why are private placements risky?
They are illiquid, speculative, and often involve high commissions. Returns depend heavily on the success of the issuer’s business plan.
How can I recover losses in a private placement?
Investors may be able to pursue claims through FINRA arbitration against the brokerage firm that sold the investment if it failed to conduct proper due diligence or recommended unsuitable products.
