UPDATE FEBRUARY 2016- FBI RAIDS UDF OFFICES IN GRAPEVINE, TEXAS—See this for details.
December 16, 2015-Grapevine, Texas
United Development Funding IV (UDF) , a real estate investment trust (REIT) based in Texas, saw its shares fall over 50% last week, from over $17.50 to under $9.
In a filing Securities & Exchange Commission filing dated December 14, 2015, the company claims that it is the victim of anonymous allegations that was operating like a Ponzi scheme. In the filing UDF reports that they were attacked by a hedge fund or funds that they believe has built a significant short position in UDF with the intention of unlawfully manipulating the price of UDF shares.
UDF reports that they believe the anonymous negative internet postings are part of a UDF‘short and distort” scheme. By posting misleading and speculative rumors, the anonymous posters hope is to drive the price of the stock down and profit from their short position. UDF is cooperating with regulators in the investigation.
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