Silver Law Group, a nationally-recognized class action and investment fraud law firm, is investigating YieldStreet after over 30 investors signed a letter to the fintech firm asking for more information on why their investments have not paid them as they had expected.
YieldStreet is a crowdfunding platform that offers and promotes individuals access to asset-backed alternative investments in areas such as marine finance, art, litigation funding, and real estate, which are typically only available to large institutions. These alternative investments can offer diversification and have low market correlation.
YieldStreet packages loans into pools, which are sold to accredited investors in a legal structure called a Borrower Payment Dependent Note (BDPN). The BDPN debt obligations are tied to the performance of loans made by YieldStreet. Some investments were tied to the scrap value of a marine vessel.
Investors Not Paid As Expected On YieldStreet Special Purpose Vehicles
According to a Wall Street Journal article, the investors who signed the letter have millions invested in the firm’s offerings and want to know how YieldStreet insured against losses and monitored millions of dollars of loans. At issue are an oil and gas deal and five marine loan investments that have not returned principal or paid interest by YieldStreet’s due dates.
The letter, which was reportedly sent to YieldStreet executives states “The nature and cause of these defaults along with the lack of forthrightness and equivocation by Yieldstreet calls into question the quality of the due diligence behind these offerings”.
The loans tied to those maritime and energy investments are not performing. The fintech firm has been in court trying to reclaim assets after ships that were collateral for loans went missing.
Investors have serious concerns about the quality of loans made and the due diligence.
BlackRock Pulls Out Of Fund
BlackRock, the world’s largest asset manager with $7.4 trillion in assets under management, recently announced that it was pulling out of a partnership with the firm called the YieldStreet Prism Fund, which launched in February, 2020. A YieldStreet spokesperson attributed the failure to the coronavirus.
YieldStreet Claims It Was Defrauded
YieldStreet’s maritime investments involve “ship breaking” which involves disassembling older ships and selling the scrap metal. In a conference call with investors, the company allegedly said that the ships backing the loans are missing and they are trying to locate collateral for $90 million in maritime loans.
The firm claims that its investment vehicles were defrauded and is involved in legal proceedings. The investors asked for evidence regarding how the firm offered the maritime loans, tracked collateral, and more.
Investors also asked for details on an oil and gas deal that hasn’t made payments to investors for a year. YieldStreet told investors it sued the firm that arranged that loan for fraud.
Investors say that YieldStreet marketed the fact that its loans were asset-backed, which offered downside protection. The investors say that downside protection was never there. According to the firm’s website, investment advisory services are provided by YieldStreet Management, LLC, an investment advisor registered with the Securities & Exchange Commission.
Contact Silver Law Group To Discuss Your YieldStreet Investment
If you have investment losses with YieldStreet, please contact Silver Law Group today for a no-cost consultation with our attorneys. Our nationally-recognized attorneys represent investors in class actions lawsuits, as well as securities arbitration claims against brokerage firms for stockbroker misconduct, lack of due diligence, and other causes of action.
Scott Silver, Silver Law Group’s managing partner, is the chairman of the Securities and Financial Fraud Group of the American Association of Justice. Please contact Scott Silver at ssilver@silverlaw.com or toll free at (800) 975-4345.