American Hospitality Property Fund III Investigation | Goodman & Nekvasil P.A., May Recover Investor Losses
Fund Manager of American Hospitality Property Fund III Updates Investors with Disturbing News
In an April 7, 2023 Q1 update the fund manager told investors, “As you are aware, Covid had a devastating impact on the hotel industry and most importantly, an impact on the valuation of Fund III assets.”
The fund went on to say, “Though a large of value has been re-gained, I do believe that is highly unlikely that the Fund will recover its value by continuing the status quo. We have options, such as liquidating now and terminating the fund. However, that would not make the Investors whole.”
American Hospitality Property Fund III Regulatory Filing
The company filed a Form D to raise capital from investors in 2014, with the offering American Hospitality Property Fund III, according to SEC filings.
Private Placements 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%.
The total offering amount is $50,000,000 with an estimated 10% paid in sales commissions, according to the Form D.
Private placements investments raise capital through the sale of equity or debt securities without having to register their securities with the SEC.
American Hospitality Property Fund III and the Risks of Private Placements
Many investors are not fully aware of the problems and risks associated with illiquid, high risk, private placements when they purchase them.
Investments, like American Hospitality Fund III, are often riskier and more complicated than traditional investments. These funds are only suitable for high net worth, sophisticated investors.
Liquidity Issues and High Sales Commissions
Private placements can face several liquidity issues due to their unique characteristics and structure.
Another problem often associated with private placements is the high sales commissions brokers typically earn for selling them. Brokers have an obligation to make investment recommendations that are consistent with their clients risk tolerance, net worth, investment objectives and experience in the market.
Unfortunately, in many cases, the high sales commission may influence unsuitable investment recommendations.
Broker Due Diligence
Broker dealers are required to perform adequate due diligence on any investment they recommend and to ensure that all recommendations are suitable for the investor. Firms that fail to do so may be held responsible for any losses in a FINRA arbitration claim.
If you believe that the investments may have been unsuitable or otherwise improper for you, we would like to discuss the possibility of your retaining our firm to represent you in an arbitration action.
There is no charge for an evaluation of your case. We handle our cases on a contingency fee basis. If we don’t recover money for you, we charge no attorney’s fee.
Goodman & Nekvasil, P.A. has recovered more than $400 million on behalf of victimized investors. If you lost money on investments in unsuitable investments and would like your case evaluated by a securities attorney, please contact us.