Erez Law is currently investigating brokers across the country who recommended their clients invest in iCap Equity, LLC a high-risk Regulation D private placement that was unsuitable for many investors.
iCap Equity, LLC Private Placement Losses
Regulation D private placements are generally not suitable for conservative and unsophisticated investors. Regrettably, for many investors, brokers recommended they invest in iCap Equity, LLC, without taking into account their experience or risk tolerance.
In 2015, the firm sought to raise capital by filing a Form D, which aimed to raise $50 million, with 10% of sales commission for brokers and financial advisors. Investors needed to meet a minimum mandate of $100,000 to participate in the investment.
Private placements are not offered for sale through a public exchange, and as such, brokers are required to perform adequate due diligence to conduct an investigation of the offering to determine suitability for their customers. Private placement investments are more complex and riskier than traditional investments, and they are recommended for sophisticated inventors with a high net worth.
Private placements such as these are that is not required to register with the securities and exchange commission (SEC), and thus they do not provide investors with the same levels of transparency that they would see when investing in publicly-traded or registered securities. This lack of visibility often makes it challenging for investors to monitor the true performance of their investments.
Just as with other private placements, iCap Equity, LLC was marketed as a safe and stable income-producing investment that is not subject to the market as do publicly-traded investments. However, it is an illiquid, speculative investment without the stringent reporting requirements of publicly-traded companies. The downside for investors is they often learn of a company’s financial instabilities and difficulties when it’s too late and they have already suffered significant investment losses.
Additionally, because it is an illiquid investment, investors typically cannot sell without experiencing significant investment losses. With illiquid, speculative investments such as these, investors cannot sell back to the issuer or other third parties in the marketplace.
One likely reason that brokers recommended their clients invest in iCap Equity, LLC is the high commission of 10% or more that brokers received for the sale of these securities.
iCap Equity, LLC Files for Bankruptcy
In March 2023, iCap Equity, LLC CEO informed investors that the current state of the economy with inflation and rising interest rates that continue to rise, “which means things will likely worsen in the near term.” He further explained that the economic situation has impacted their real estate portfolio and their ability to return capital to investors in the time frame originally indicated to investors.
Regrettably, for investors across the country, iCap Equity, LLC informed investors that they would cease making monthly interest payments, resulting in significant investment losses or losses to their income stream for many retail investors. Investors across the country were left unaware that the investments were risky and illiquid.
In August 2023, iCap Equities, LLC CEO resigned, citing in a letter to investors the reasons being difficulties that the firm has faced trying to grow its real estate portfolio.
In September 2013, iCap Enterprises and its funds filed for Chapter 11 bankruptcy protection. Alongside this announcement, the firm announced plans to reshape its business. iCap Equity, LLC oversaw the iCap Northwest Opportunity Fund, LLC, a Regulation D private placement company that offers lending support and capital to builders and developers in the Pacific Northwest (PNW).
Paladin Management Group has taken over the role of managing the firm’s business decisions. The firm will conduct an assessment of its real estate inventory, as well as legal claims against the company, and the liquidation plan for the assets.
Which Funds Did iCap Equities Issue?
According to public records, iCap Equity, LLC issued the following funds, which are all included in the Chapter 11 bankruptcy proceedings:
- 725 Broadway, LLC
- iCap @ UW, LLC
- iCap Broadway LLC
- iCap Campbell Way LLC
- iCap Enterprises, Inc. f/k/a Altius Development, Inc.
- iCap Equity LLC
- iCap Funding LLC
- iCap Holding 5 LLC
- iCap Holding 6 LLC
- iCap Holding LLC
- iCap Investments, LLC
- iCap Management LLC
- iCap Northwest Opportunity Fund, LLC
- iCap Pacific Development LLC
- iCap Pacific Income 4 Fund, LLC
- iCap Pacific Income 5 Fund, LLC
- iCap Pacific Income 5 Fund, LLC
- iCap Pacific Northwest Opportunity and Income Fund, LLC
- iCap Pacific NW Management, LLC
- iCap Realty, LLC
- iCap Vault, LLC
- iCap Vault I, LLC
- iCap Vault Management, LLC
- Senza Kenmore, LLC
- UW 17TH AVE, LLC
- Vault Holding, LLC
- Vault Holding 1, LLC
- VH 1121 14th, LLC
- VH 2nd Street Office LLC
- VH Pioneer Village LLC
- VH Senior Care LLC
- VH Willows Townhomes, LLC
Brokerage Firms Recommended iCap Equity, LLC
Brokerage firms across the country recommended the sale of or endorsed the purchase and sale of securities by iCap Equities, LLC or its associated funds, including:
- Advisory Group Equity Services, Ltd.
- Ausdal Financial Partners, Inc.
- Bradley Wealth Management, LLC
- Center Street Strategies Securities, Inc.
- Chauner Securities, Inc.
- Claraphi Advisory Networks, LLC
- Financial Partners, Ausdal, Inc.
- Freedom Investors Corp.
- Gardner Financial Services, Inc.
- IBS Financial Services, Inc.
- Meyers Associates, LP
- Pariter Securities, LLC
- Stillpoint Capital, LLC
- Titan Securities
- Wall Street Strategies, Inc.
iCap Equity, LLC Recovery Loss Options
Pursuant to FINRA Rules, member firms are responsible for supervising a broker’s activities during the time the broker is registered with the firm. Therefore, brokerage firms across the country may be liable for investment or other losses suffered by its customers.
Erez Law represents investors in the United States for claims against brokers and brokerage firms for wrongdoing. If you have experienced investment losses, please call us at 888-840-1571 or complete our contact form for a free consultation. Erez Law is a nationally recognized law firm representing individuals, trusts, corporations and institutions in claims against brokerage firms, banks and insurance companies on a contingency fee basis.
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