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Written by 2:02 pm Blog, Securities Fraud Articles

Potential Recovery of IMH Secured Loan Fund Investment Losses

Have you suffered investment losses as a result of the recommendation that you purchase units of the IMH Secured Loan Fund? If you have, The White Law Group may be able to assist you in recovering those losses in the IMH Secured Loan Fund, LLC (now known as IMH Financial Corporation) through a FINRA arbitration claim. The White Law Group first wrote about the IMH Secured Loan Fund, LLC in 2010 and has been continuing to investigate and monitor its performance on behalf of investors as well as research how best to represent investors in claims to recover IMH losses through FINRA.

The IMH Secured Loan Fund, LLC changed its name to IMH Financial Corporation in 2010. According to IMH Financial Corporation latest 10-K annual report published in April 2011, from 2003 until 2008 The IMH Secured Loan Fund, LLC “raised $875 million of equity capital.” Unfortunately things have not been smooth for investors, especially since the real estate market started experiencing significant troubles around 2008.

IMH notes in their 10-K that “As a result of the unprecedented disruptions in the general real estate and related markets and the rapid decline in the global and U.S. economies, on October 1, 2008, pursuant to its operating agreement, the Fund suspended member redemption requests.” This decision made the investments nearly completely illiquid and many investors have struggled with the inability to access their investment funds. IMH also noted that they “suspended regular monthly distributions to members in the second quarter of 2009.”

IMH has been attempting to regain its footing and to work to improve the condition of the investment, including positioning themselves “to become a publicly traded corporation listed on the NYSE.” The fund also made distribution payments for the first time since 2009 in July of 2011. Additionally, investors received a letter in late August of 2011 which expressed optimism amongst troubles, the letter stated, “As difficult as the last few years have been, we are proud of the fortitude our management team has exhibited and the decisions that have been made in navigating through what has been a treacherous real estate and lending environment.  Over the last two years we have had to cut through many weeds; however, we are encouraged by the pathway we have now cleared.  We see opportunity ahead for our Company and our shareholders.”

While this news may be encouraging to some investors, their latest 10-K annual report and 10-Q quarterly report point to an investment that is valued as a serious loss for investors and continues to struggle financially.

The 2010 annual report stated that “based on our pro forma net tangible book value of approximately $201.4 million as of December 31, 2010, the estimated book value per share for the shares issued in connection with the Conversion Transactions is $11.98 per share.” These estimated values for the investment represent serious losses for investors. This is clear based on the fact that IMH originally raised $875 million in capital.

IMH Financial Corporation’s most recent quarterly report (10-Q) for the period ending June 2011 also had some information that may concern investors. It states, “…we have acquired or originated real estate assets as of June 30, 2011 with an original investment basis of $676.6 million and a current carrying value of $210.2 million consisting of commercial real estate mortgage loans with a carrying value of $117.2 million and owned property with a carrying value of $92.9 million. We believe the decline in the carrying value of our real estate assets is reflective of the deterioration of the commercial real estate lending market and the sustained decline in pricing of residential and commercial real estate in the last two to three years together with the continuing downturn in the commercial real estate markets and general economy.”

This information indicates that while IMH has been attempting to position for and is cautiously optimistic about the future, they still appear to be in a difficult position. In the meantime investors are stuck in an investment that appears to have depreciated significantly in value and are unable to access any capital that remains.

The White Law Group is investigating how broker dealers sold and represented the IMH Secured Loan Fund investments to customers. Financial professionals and brokerage firms have a fiduciary duty to perform due diligence on any investment and to insure that an investment is appropriate in light of the investor’s age, investment experience, and investment objectives. Financial professionals and brokerage firms that do not live up to this responsibility may be in violation of FINRA regulatory rules and liable for claims to recover the investment losses.

If you invested in IMH Secured Loan Fund, LLC (now known as IMH Financial Corporation) and would like to speak to a securities about your potential to recover your investment through FINRA arbitration please call our Chicago office at 312-238-9650.

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 Boca Raton, Florida.

For more information on The White Law Group, please visit our website at https://whitesecuritieslaw.com.

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