Investors are accusing brokerage firms of making inappropriate recommendations and selling investments in Icon Leasing Fund Eleven, LLC and Icon Leasing Fund Twelve, LLC to them even though they would not be able to withstand the high risks. The two funds are registered, non-traded Equipment Leasing Direct Participation Programs (DPPs).
Not only are the Icon Eleven and Icon Twelve investments very high risk and illiquid investments, but also there are little if any secondary markets where their shares can be sold. Investment dividends from Icon cannot be predicted because they are contingent upon profits made from equipment leases.
During their offering periods, the two funds started paying distributions. However, not long after Icon Eleven and Twelve stopped taking new investors, the investments’ value started to drop fast and dividend payments became inconsistent. The decline has resulted in significant financial losses for investors.
In one quarterly report from almost a year ago Icon Leasing Fund Twelve noted that its liabilities are far greater than its assets. SEC documents from the end of 2012 show that Icon Eleven’s estimated per share value was $159.31, which is a more than 84% decline in share value.
Meantime, as investors have sustained losses, Icon Investments purportedly gave financial firms and their investment advisers among the biggest commissions for alternative products. The Icon Leasing Fund Eleven and Icon Leasing Fund Twelve have been accused of using just 81% of investors’ money to buy actual equipment while 18% of these funds went toward fees, commissions, and expenses.
Also, regulator filings reveal that Icon Funds reserved the right to buy shares for affiliates and officers at a discount. This approach would have earned higher returns for Icon-related entities while the value of investors’ shares would have been harmed.
If you are an investor in the United States who has sustained losses related to the Icon Leasing Fund Twelve, the Icon Leasing Fund Eleven, or the Icon Leasing Fund Ten, please contact our Icon Investment Fraud law firm today. Our alternative investment fraud attorneys would like to offer you a free case consultation. You may have grounds for a FINRA arbitration case.
Direct Participation Programs (DPPS0
Icon Trusts are registered, non-traded Equipment Leasing Direct Participation Programs (DPPs). Although registered with the U.S. Securities and Exchange Commission, DPPs are not found on public exchanges. Their lack of an active secondary market makes it hard for retail investors to independently assess the prices charged for these investments. Detecting fraud can also be harder.
With equipment leasing DPPs, a sponsor sells units of limited partnership. The substantial offering costs are subtracted while the rest of the money made is invested in a pool of equipment leases that were leveraged by more borrowing. This type of DPP touts a reliable income stream. However, a substantial number of the distributions that are given to investors are not income but a return of capital. And while partners may market the tax benefits, such as depreciation deductions and interest payment on borrowing employed to leverage, to investors, these benefits can only be applied to offset income from other passive investments.
Often, investors will get less than what they originally put into equipment leasing DPPs. Recently, Icon Leasing investors were told that the company would no longer pay dividends on certain funds.
A number of brokerage firms have been accused of not telling investors about the risks involved. Investors have also accused Icon of failing to do the necessary due diligence before selling this type of equipment leasing DPPs to customers.
Contact Shepherd Smith Edwards and Kantas, LTD LLP today.
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