Written by The White Law Group• January 10, 2023• 3:17 pm• Blog, Current Investigations

Newlight Technologies Inc. – Private Placement Investigation

Investigating Potential Claims: Newlight Technologies Inc.

The White Law Group is investigating potential securities claims involving brokerage firms who may have improperly recommended private placement investments such as Newlight Technologies, Inc to investors.

Table of Contents

Newlight Technologies Inc. reportedly filed a form D to raise capital from investors in 2019, according to this SEC filing. The total offering amount sold to investors was purportedly $20,701,751, according to the Reg D. Regulation D, an SEC regulation, allows small to midsize companies an opportunity to raise capital from investors with less expense and reporting requirements than traditional means, making it quite popular.

Often these private placement investments are touted for their income potential and for being “non-correlated” to the stock market. Too often the financial advisor or broker ignores and/or fails to disclose the risks involved in these investments.

Risks of Investing in REG D Private Placement Investments

Private placement investments such as Newlight Technologies Inc., are typically illiquid investments. There are often legal or contractual restrictions on your ability to transfer your holdings, and even if sale of your holdings is permitted there may be no buyers. You may need to hold these securities for an indefinite period of time.

Companies that issue unlisted securities may provide little or no transparency into their ongoing operations and financial condition.

While some private placement investments may make periodic distributions, some may not make any. Another problem is the high fees and commissions that brokers and financial advisors may “earn” for the sale of a private placement investments — sometimes close to 10% of the client’s total investment.

The White Law Group has represented numerous investors in claims against their brokerage firms for improperly recommending private placement investments.

In those claims, the firm has alleged, among other things, that the investments were (1) high-risk and unsuitable for our clients given their financial situation, needs and investment objectives, (2) that the risks of the investment were not fully disclosed to them, and (3) that the brokerage firms that sold the investments failed to conduct the proper due diligence with respect to the investments as the firms are required to do by FINRA Rules.

FINRA Arbitration to Recover Investment Losses

The Financial Industry Regulatory Authority (FINRA) operates the largest securities dispute resolution forum in the United States, and provides a fair, efficient and effective venue to handle a securities-related dispute.

Brokers have a fiduciary duty to make investment recommendations that are consistent with the clients’ net worth, investment experience and objectives. Risk tolerance, age, and liquidity needs also need to be considered.

When brokers violate securities laws, such as making unsuitable investments, the brokerage firm they are working with may be liable for investment losses through FINRA Arbitration.

This information is being provided by The White Law Group. The White Law Group, LLC is a national securities fraud, securities arbitration, and investor protection law firm with offices in Chicago, Illinois.