YieldStreet Real Estate Investors May Have Investment Loss Recovery Options

YieldStreet is an online platform that provides access to investments previously only reserved for the "1%", namely, wealthy individuals or institutional investors. YieldStreet provides a platform for investors to select from a broad range of "alterative investments", which include real estate investments, private notes, transportation investments (ships), as well as more exotic investments such as art.

CNBC recently reported that YieldStreet's real estate investments resulted in massive losses for YieldStreet investors. Contrary to what online platforms may tout, many real estate offerings offered through these marketplaces are in fact high-risk, illiquid investments where the investor may have little control over the use of proceeds, may have long holding periods, may be subject to additional capital calls beyond the initial amount of their investment, and may suffer a complete loss of principal.

Additional risks of investing with online marketplaces may also include a lack of transparency into the due diligence conducted on each sponsor or property offered and sold, or may include a risk that the marketplace is acting as an unregistered broker-dealer by marketing, offering, selling, and/or participating in the sale of securities without being properly licensed.

As a result, investors must exercise great care when choosing to invest through a crowdfunding marketplace.

Investors Who Suffered Losses in YieldStreet Real Estate Investments May Have Loss Recovery Options

Fortunately for investors, investors who suffer losses in crowdfunded real estate investments may have investment loss recovery options. Marketplaces that represent to the investing public that they conduct due diligence on real estate sponsors or offerings may be held to a stringent standard of care regarding such due diligence, and may held liable for failure to conduct proper due diligence.

Similarly, the marketplaces that have affiliated broker-dealers may be held to stringent due diligence requirements under FINRA rules. Registered broker-dealers recommending or selling crowdfunded real estate investments may also be required to ensure that the investment being recommended is "suitable" for the customer, and that it has a "reasonable basis" for recommending the security for purchase. This “reasonable-basis” suitability requirement means that in the context of crowdfunded real estate investments that brokerage firms have a duty to conduct due diligence on:

• The issuer and its management;
• The business prospects of the issuer/sponsor;
• The assets held by or to be acquired by the issuer/sponsor;
• The claims being made; and
• The intended use of proceeds of the offering.

Broker-dealers, including those associated with online marketplaces, can be held liable if they violate this reasonable-basis suitability requirement. In addition, third-party firms such as unregistered crowdfunding marketplaces that materially assist in a securities offering may have liability under state and federal securities laws for any misrepresentations or omissions made in connection with the sale of such securities.

Finally, any online marketplace that is offering and/or selling securities without registering as a broker-dealer may be liable to the investor for losses or "rescission" of the investment transaction offered or sold by the unregistered entity.

YieldStreet Investors Should Contact Kons Law to Join a Lawsuit or Arbitration to Pursue Recovery

Investors interested in learning more about joining a lawsuit or arbitration proceeding should fill out the contact form below:

Kons Law is well-versed in such cases and is already pursuing a nationwide class action against another online marketplace seeking rescission damages of over $1 billion over failed real estate investments. If you would like a free consultation to discuss the YieldStreet recovery process in more detail, call Kons Law Firm at (860) 920-5181 for a FREE, NO OBLIGATION consultation to discuss your YieldStreet investment loss recovery options.

Kons Law represents investors throughout the US in securities arbitration and litigation matters. To learn more about the Firm’s securities litigation and FINRA arbitration practice, please visit www.investmentfraudattorneys.com.