Waypoint 2022 Development Fund II Lawsuit and Investor Claims
The White Law Group is investigating potential claims involving Waypoint 2022 Development Fund II, LP, a private real estate development fund sold through Third Seven Capital. Here is what the fund’s SEC filings show, and what investors considering a lawsuit or FINRA arbitration claim should know.
What Is Waypoint 2022 Development Fund II, LP?
Waypoint 2022 Development Fund II, LP is a Delaware limited partnership formed in 2022 and based in Boca Raton, Florida. It is part of the Waypoint Residential family of apartment funds, and its Form D lists residential real estate as its industry. Investor statements may refer to it as WREI 2022 Development Fund II.
Waypoint 2022 Development Fund II Offering Terms
According to the amended Form D filed in April 2023, the offering terms are:
- Exemption: Rule 506(c) of Regulation D
- Securities offered: limited partnership interests
- Maximum offering: $300,000,000 in capital commitments
- Amount sold: $12,354,073 to 43 investors
- Minimum investment: $250,000, though the general partner may accept less
- Date of first sale: April 15, 2022
The fund also claims exclusions under Sections 3(c)(5), 3(c)(6) and 3(c)(7) of the Investment Company Act. As of that filing, the fund had raised about 4% of its $300 million maximum.
Third Seven Capital’s Role and Placement Fees
Third Seven Capital, LLC is the only brokerage firm the Form D lists as receiving sales compensation, and it was authorized to solicit investors in all states. The filing describes a placement fee of up to 4% of capital commitments. Waypoint estimated those fees at $494,163.
Broker Due Diligence Obligations
A brokerage firm must investigate a private placement before recommending it, including the sponsor’s track record, the development plan, the fees and the risks. The firm must also make sure the investment fits each customer. With a $250,000 minimum, a single recommendation can tie up a large share of an investor’s savings.
Risks of Real Estate Development Funds
Ground-up apartment development carries construction delays, cost overruns, financing risk and lease-up risk before a property earns income. Limited partnership interests have no public market, and investors usually cannot get their money out until properties are sold. The general partner controls the fund’s decisions and how its holdings are valued.
Recovering Waypoint 2022 Development Fund II Losses
If your broker recommended this fund without explaining the risks, or it did not fit your situation, you may be able to recover your losses. The brokerage firm that sold the fund answers for its brokers’ recommendations. These claims are usually brought through FINRA arbitration.
Contact The White Law Group
The White Law Group is a national securities fraud and investment loss recovery law firm with offices in Chicago and Seattle. If you invested in Waypoint 2022 Development Fund II through Third Seven Capital, call (888) 637-5510 for a free consultation, or contact us online.
Frequently Asked Questions
How do I file a claim to recover money I invested in Waypoint 2022 Development Fund II?
You file a claim against the brokerage firm that recommended and sold you the investment. Most brokerage account agreements typically include a pre-dispute arbitration clause, so these cases usually go to FINRA arbitration rather than court. Arbitration can still result in a money recovery.
When is a real estate development fund unsuitable for an investor?
It is unsuitable when the investor needs access to the money, can’t absorb a large loss or has a conservative risk profile. Development funds can lock up money for years before any return. Putting too much of a portfolio into one illiquid fund can also make a recommendation unsuitable.
Can Third Seven Capital be held responsible for my losses?
Yes, a brokerage firm can be liable for an unsuitable recommendation or for failing to vet the product it sold. Firms must also supervise their brokers. Third Seven Capital was the only placement agent named on this fund’s Form D, so its due diligence will matter in any claim.
