Erez Law is currently investigating financial advisors across the country who recommended their clients invest in stocks of Uniti Group Inc. It is alleged that brokers from Raymond James and other brokerage firms across the country recommended their clients invest in Uniti.
Uniti is a real estate investment trust (REIT) that focuses on the acquisition and construction of mission-critical communications infrastructure such as fiber, wireless towers and ground leases.
According to its website, “We work with customers in a wide variety of situations, including monetizing existing assets through a sale-leaseback transaction, financing of greenfield infrastructure development, and merger and acquisition support for complementary companies. Our REIT structure provides customers with a flexible source of permanent capital for strategic initiatives, enabling them to strengthen and expand the critical communications infrastructure that unifies businesses, consumers and communities across the country.”
It is alleged that brokers incorrectly positioned the investment as a stable fixed income type of investment, when in actuality it was a speculative REIT with significant litigation risk. Many financial advisors believed that Uniti offered a high reward to risk ratio to make it appropriate for highly risk-tolerant investors.
Windstream Holdings, a telecom service provider, is the former parent company of Uniti. Uniti was formed in 2015 to separate Windstream’s network infrastructure holdings.
On Friday, February 15, a federal judge ruled that Windstream Holdings defaulted on its bonds in 2015. The court ruled that Windstream Holdings breached its covenants, as asserted by Aurelius Capital Management, and awarded Aurelius a judgement of more than $310 million. This loss sent Windstream shares crashing 57%, from $3.37 on February 15 to $1.31 on February 19. The stock took another dip, and now trades at just $0.235.
On February 25, news broke that Windstream Holdings was alleged to be preparing to file for Chapter 11 bankruptcy. This caused Uniti to fall more than 10% in the morning, and then increase 33%. That same day, Windstream’s stock rose just over 10% in the morning and crashed 57% later that day, ending the day at $0.45.
Uniti saw a high of $19.98 on February 15 and down to $12.51 on February 19 and $9.53 on February 22. As of April 11, 2019, the stock trades at $11.85, according to MarketWatch.
The risk of dividend cut is now high, which may cause a devastating blow to Uniti investors relying on those payments. The stock is now rated as a “sell” from a “spec buy” rating.
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, Raymond James and other brokerage firms 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 and 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.