Shopoff Commercial Growth & Income Fund II: Investigation

Shopoff Commercial Growth & Income Fund II: Illiquid Investment

The White Law Group is investigating potential claims involving broker dealers who may have unsuitably recommended high risk private placement investments like Shopoff Commercial Growth & Income Fund II to investors. 

Shopoff Realty Investments reportedly filed a Form D to raise capital from investors in 2018 for the offering Shopoff Commercial Growth & Income Fund II LP. According to SEC filings, the total offering amount sold was purportedly $15,051,020. 

The Trouble with Reg D Private Placements

The problem with Reg D private placement investments such as Shopoff Commercial Growth & Income Fund II is that they often involve a high degree of risk. They are typically sold as unregistered securities which lack the same regulatory oversight as more traditional investment products like stocks or bonds. Lack of liquidity can also be a problem for investors. 

Investments such as these are typically sold by brokerage firms in exchange for a large up-front commission. High fees can range from 7-10%, as well as additional “due diligence fees” that can range from 1-3%. In this particular investment, the sales commissions and fees are estimated at 5% of the offering amount, according to the Reg D filing. 

According to its website, “An investment in a Shopoff limited partnership involves a high degree of risk, including the possible loss of your investment, and is illiquid with an uncertain liquidity date. Past performance is not indicative of future results.” 

Filing a Complaint against your Brokerage Firm 

Despite the risks of investing in alternative investments– such as a private placement investment– brokerage firms continue to push this type of product because of the high commissions associated with their sale and creation. 

If a brokerage firm makes unsuitable investment recommendations or fails to adequately disclose the risks associated with an investment, they may be liable for investment losses through FINRA arbitration. 

FINRA operates the largest securities dispute resolution forum in the United States, and has extensive experience in providing a fair, efficient and effective venue to handle a securities-related dispute. 

Class Action vs. Individual FINRA Arbitration Lawsuit

People often wonder whether a large class action lawsuit is a better litigation option for them than an individual FINRA arbitration case.  The answer depends on many factors, but typically if the loss sustained is large (say larger than $100,000), an individual arbitration claim is likely a better option.  Class actions as a recovery option are more appropriate for grouping large numbers of individuals who have small claims – too small to generally pursue individually.

Free Consultation with a Securities Attorney 

If you have concerns regarding your investment in Shopoff Commercial Growth & Income Fund II or another Shopoff fund, The White Law Group may be able to help you. To speak with a securities attorney about your options, please call the office 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.