Commonwealth & LPL Financial Face Fallout From a Real Estate Private Placement They Sold
Commonwealth Financial Network and LPL Financial LLC had not been subjected to the rash of claims generated from the marketing and sales of private placement offerings until now, according to Investment News. Many small to midsize independent broker-dealers have shuttered their doors because of the sales of private placement offerings such as Medical Capital Holdings Incorporated and Provident Royalties LLC, which were deemed to be fraudulent in 2009 by the Securities and Exchange Commission (SEC). Those toxic Regulation D deals were the cause of investors losing at least half of their principal in the sales of some $2.7 billion worth of the products.
Now, Commonwealth and LPL are facing issues regarding their sale of Laeroc 2005-2006 Income Fund LP, which is a real estate private placement that is undergoing pressure from its creditors. The fund is attempting to raise another $12 million to $15 million to pay of $49 million worth of debt at a discount. Laeroc Partners Incorporated is a real estate investor that focuses on the Los Angeles and other areas of Southern California. It was founded in 1986 and began as a workout specialist for distressed real estate. It now is reported to have at least $650 million in assets and has created fourteen (14) funds. They issued a “cash call” notice to investors in the Laeroc 2005-2006 Income Fund in June 2011. Needless to say, a cash call on a private real estate offering is a bad thing to have happen. The fund’s lenders have indicated that they will foreclose by year end on a Sacramento, CA shopping center, if they don’t come up with more money. According to the article, the Laeroc fund has paid over $180 million to purchase eight (8) properties and owes $105 million in mortgage debt. According to those in the industry, many real estate deals that raised money and purchased properties from 2006 to 2009 are now struggling, including non-traded real estate trusts (REITs).
If you have suffered losses in the Laeroc 2005-2006 Income Fund LP sold by Commonwealth or LPL, please contact our securities law firm for a confidential consultation at 1-800-259-9010.