Investigating Potential Claims in Crossroads Capital

Did you lose money investing in Crossroads Capital at the recommendation of your broker? If so, the attorneys at The White Law Group may be able to help you by filing a FINRA Arbitration Claim against the brokerage firm that sold you the investment.

According to a recent press release, Crossroads Capital, Inc. (NASDAQ: XRDC) just announced the resulting plan to delist their common stock after a shareholder meeting.

The company announced the results of its annual and special meetings of stockholders, both held on June 2, 2017.  At the special meeting, stockholders approved the withdrawal of the Company’s election to be regulated as a business development company under the Investment Company Act of 1940.

The special meeting was adjourned until June 23, 2017 to permit the Company to voluntarily delist from NASDAQ and to begin the process of withdrawing the Company’s election to be regulated as a business development company.

Accordingly, NASDAQ is scheduled to suspend trading of shares of common stock of the Company at the close of business on June 12, 2017.

When the special meeting is reconvened on June 23, 2017, stockholders will vote to approve the conversion of the Company into a Liquidating Trust.  The Liquidating Trust will oversee further portfolio liquidations. The Company expects the Liquidating Trust to make an initial distribution of cash to trust beneficiaries in the amount of $1.60 per unit of beneficial interest shortly after conversion.

At the annual meeting, stockholders elected Phillip Goldstein, Andrew Dakos and Gerald Hellerman to serve as directors for one-year terms, and ratified the selection of Tait, Weller & Baker, LLP as the Company’s independent registered public accountant for the fiscal year ending December 31, 2017.

Crossroads Capital, Inc. is a closed-end fund regulated as a business development company under the Investment Company Act of 1940.

What is a Business Development Company (BDC)?

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.

BDCs were created in 1980 after Congress approved a series of amendments to the Investment Act of 1940. The creation of BDCs was meant to spur investment in smaller companies that couldn’t attract traditional forms of capital. BDCs have become increasingly popular in recent years, in part due to their ability to create strong returns on investment. However, BDCs are not without their risks and pitfalls.

Risks of BDCs

Business Development Companies such as Crossroads Capital operate much like REITs (Real Estate Investment Trusts). Non-traded BDCs have many of the same problems for investors as non-traded REITs. They are high-risk, often have high commissions, and lack liquidity.

The White Law Group has represented a number of investors over the last few years in non-traded REITs and as well as BDCs– in large part because of their high commission structure and the possibility that nefarious financial advisors will push these products unsuitably to maximize their own commissions.  The firm is investigating the liability that brokerage firms may have for recommending high-risk BDCs, like Crossroads Capital.

Brokerage firms are required to perform adequate due diligence on any investment they recommend and to ensure that all recommendations are suitable for the investor in light of that particular investor’s age, investment experience, net worth, risk tolerance, investment objectives, and income.  Firms that fail to perform adequate due diligence or that make unsuitable recommendations can be held responsible for investment losses in a FINRA arbitration claim.

Free Consultation

If you suffered losses investing in Crossroads Capital and would like to discuss your litigation options, please call the securities attorneys of The White Law Group at 888.637.5510 for a free consultation.

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 and Seattle, Washington.  The firm represents investors in FINRA arbitration claims throughout the country.  For more information on the firm, visit http://whitesecuritieslaw.com.