Aequitas Commercial Finance, LLC Investor Lawsuit Alleges Securities Laws Violations

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Company Name(s): 
Aequitas Commercial Finance
Case Name: 
Aequitas Commercial Finance Shareholder Class Action Lawsuit 04/22/2016
Case Status: 
Lawsuit Filed
Lawsuit Overview
Type of Lawsuit: 
Shareholder Class Action
Date Filed: 
04/22/2016
Summary: 

April 22, 2016 (Shareholders Foundation) - Several investors who purchased securities issued by Aequitas Commercial Finance, LLC filed a lawsuit against Aequitas' auditing firms and Aequitas' law firms in effort to return to all Aequitas investors the money they paid for the securities, plus interest at the rate stated in the security or 9 percent.

The plaintiff says that Aequitas raised hundreds of millions of dollars from thousands of investors by selling securities issued by Aequitas Commercial Finance, LLC, the Aequitas Funds, and MotoLease Financial, LLC. However, the plaintiff claims that the Aequitas securities were sold in violation of the Oregon Securities Law and that the securities were not registered in compliance with Oregon law, and Aequitas sold Aequitas securities by means of untrue statements of material fact and omissions of material facts.

The plaintiff claims that Aequitas' auditing firms and Aequitas' law firms participated and aided in the unlawful sales of Aequitas securities, and that as a result, Defendants are jointly and severally liable to return to all Aequitas investors the money they paid for the securities, plus interest at the rate stated in the security or 9 percent

Between January 2014 and January 2016, Aequitas-affiliated entities raised about $350 million selling notes directly to investors pursuant to Private Placement Memorandums representing the funds would be used to purchase trade receivables. But according to a complaint filed by the Securities and Exchange Commission (“SEC”), unbeknownst to investors, the May 2014 default of an entity accounting for 75% of ACF’s receivables pushed the Aequitas funds into insolvency. Thereafter, private placement proceeds were used not to purchase trade receivables but principally to pay operating costs, as well as redemptions and interests to existing investors.