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SEC Subpoenas Numerous Woodbridge LLCs in Probe of Sales of Unregistered Securities

House in HandsRecently, the Securities and Exchange Commission (SEC) requested documents form a group of companies known as Woodbridge that has previously been accused of selling unregistered securities by state securities regulators. The SEC reportedly has now asked a Miami federal judge to enforce subpoenas against nearly 250 companies affiliated with Woodbridge as part of the SEC’s investigation into whether “the company is perpetrating a fraud on its investors.”

The SEC also recently disclosed its ongoing investigation into Woodbridge’s receipt of more than $1 billion in investor funds in connection with securities offerings including a security known as the First Position Commercial Mortgage (“FPCM”), which the company describes as “[a] private third-party loan to Woodbridge [which] provides higher returns with shorter terms secured by commercial real estate.”  In connection with FCPMs, investors reportedly loan money to Woodbridge, which says it uses those funds to acquire properties and in return pays investors a 5% annual return.  Woodbridge also raises money using investment offerings through entities such as Woodbridge Mortgage Investment Fund III, LLC.

The SEC’s investigation, which began in September 2016, reportedly is focused on “possible significant violations of the securities laws,” including “the offer and sale of unregistered securities, the sale of securities by unregistered brokers, and the commission of fraud in connection with the offer, purchase, and sale of securities.”  The recent round of subpoena requests reportedly began after Woodbridge failed to cooperate with less formal requests for documents by the SEC.

The 236 LLC subpoenas requested by the SEC reportedly sought basic information about the formation, ownership and bank account information about the Woodbridge-linked LLCs, in order to garner further insight into their affiliation and connection with Woodbridge and its President, Robert Shapiro.

Woodbridge, based in California, has reportedly raised over $1 billion from investors.  Despite the regulatory actions, Woodbridge reportedly continues to sell securities. Some of the issuers of Woodbridge securities are the following:

*         WMF Management, LLC

*          Woodbridge Group of Companies, LLC

*          Woodbridge Mortgage Investment Fund 1, LLC

*          Woodbridge Mortgage Investment Fund 2, LLC

*          Woodbridge Mortgage Investment Fund 3, LLC

*          Woodbridge Mortgage Investment Fund PA, LLC

*          Woodbridge Group of Companies, LLC (d/b/a Woodbridge Wealth)

As members and associated persons of FINRA, brokerage firms and their financial advisors must ensure that adequate due diligence is performed on any investment that is recommended to investors- including private placements under Regulation D.  Further, firms and their brokers must ensure that investors are informed of the risks associated with an investment, and must conduct a suitability analysis to determine if an investment meets an investor’s stated investment objectives and risk profile.  Either an unsuitable recommendation to purchase an investment or a misrepresentation concerning the nature and characteristics of the investment may give rise to a claim against a stockbroker or financial advisor.

The attorneys at Law Office of Christopher J. Gray, P.C. have significant experience in representing investors who have incurred losses in connection with private placement offerings, including investments in oil and gas drilling funds and hedge funds.  Investors may contact our office at (866) 966-9598 or for a no-cost, confidential consultation.



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