Sanders Creek Investments LLC Lawsuit | Private Placement Risks
The White Law Group is investigating potential claims involving Sanders Creek Investments, LLC, a Missouri real estate private placement that raised $5.8 million from 60 investors in late 2018. Here is what the offering’s SEC filing shows, and what your options may be if you invested.
Sanders Creek Investments was sold as a Regulation D private placement. These offerings carry risks that many retail investors are never told about. Investors with concerns can speak with our FINRA arbitration attorneys about a possible claim against the brokerage firm that recommended it.
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What Is Sanders Creek Investments, LLC?
Sanders Creek Investments, LLC is a Missouri limited liability company formed in 2018 and based in Dexter, Missouri. Its Form D lists its industry as “Other Real Estate.” The filing names Sanders Creek Manager, LLC as manager, and Legacy Land Holdings, LLC as owner of the manager. The company declined to disclose its revenue or asset size.
Sanders Creek Investments Offering Terms
According to the Form D filed with the SEC on December 6, 2018:
- Exemption claimed: Rule 506(b) of Regulation D
- Type of security: Equity
- Total offering amount: $5,798,000, reported as fully sold
- Number of investors: 60
- Minimum investment: $19,000
- Date of first sale: December 4, 2018
- Sales commissions reported: $19,500
- Proceeds paid to executive officers, directors or promoters: $400,000
The Form D names the following FINRA member firms as receiving sales compensation:
- Center Street Securities (Florida and North Carolina)
- Emerson Equity LLC (Texas)
- Whitehall-Parker Securities, Inc. (California)
Broker Due Diligence Obligations
Brokerage firms must investigate a private placement before recommending it. FINRA Regulatory Notice 10-22 says a firm cannot rely only on the issuer’s own sales materials. It must look into the issuer, its management, and the claims in the offering documents. A broker must also have a reasonable basis to believe the investment fits each customer’s needs under FINRA Rule 2111.
Risks of Reg D Private Placements Like Sanders Creek Investments
- Hard to sell. There is no public market for these interests. Investors may be unable to get their money out for years.
- No SEC review. The SEC does not review or approve a Form D or the offering documents behind it.
- No track record. Sanders Creek Investments was formed the same year it raised money from investors.
- Limited financial disclosure. The company declined to report its revenue or asset size on its Form D.
- Payments to insiders. The filing reports $400,000, about 7% of the money raised, going to people and entities named as executive officers or promoters.
- Concentration risk. Investors’ money was tied to a single real estate venture.
Recovering Investment Losses in Sanders Creek Investments
Investors who lost money may be able to recover it from the brokerage firm that recommended the investment. These claims typically allege the firm skipped proper due diligence, recommended an unsuitable investment, or failed to explain the risks. They are generally filed through FINRA arbitration.
Contact The White Law Group
The White Law Group, national securities fraud attorneys with offices in Chicago and Seattle, is investigating potential claims on behalf of Sanders Creek Investments investors. Call (888) 637-5510 for a free consultation, or contact us online.
Frequently Asked Questions
How do I file a claim to recover money invested in Sanders Creek Investments?
You file a claim against the brokerage firm that recommended the investment, usually through FINRA arbitration. Most brokerage account agreements typically include a pre-dispute arbitration clause, and many retail investors don’t know they signed one. That means claims generally go to FINRA arbitration rather than court, and arbitration can still result in a monetary award or settlement.
What is a Regulation D private placement, and why does it matter for my investment?
A Regulation D private placement is an investment sold without full SEC registration. The company files only a short notice, called a Form D, and the SEC does not review the offering. That puts more responsibility on your broker to investigate the investment before recommending it.
Can the brokerage firm be held responsible for my losses?
A3: Yes, in many cases. FINRA requires brokerage firms to supervise their brokers and the products those brokers sell. A firm that approved a private placement without a reasonable investigation, or missed an unsuitable recommendation, may be liable for failing to supervise.
