Investment Reviews Demystified: What Investors In Indiana Need To Know

In this article, you will discover:

• What an investment review is and what it consists of
• Whether a review can uncover risks to investing
• The frequency with which an investment review should occur

What Is An Investment Review, And Who Should Conduct One?

An investment review is a review of the materials that you receive from the company before you invest. The review would be for any type of alternative investments or private securities, sometimes referred to as investment programs, promissory notes or investment strategies.

Many investors experience some type of investment loss and seek the help of an attorney. Often, during the intake process, the attorney looks at the client’s investment documents only to discover that the loss the client complained about was actually disclosed as a risk. Moreover, even though the client’s losses were significant, the insiders were still compensated because the investment contract allowed it.

A careful investment review can prevent the later sentiment of, “I wish I had known that prior to investing.”

What Are The Key Components Of A Comprehensive Review?

For investment reviews, you can only look at material provided by the company to investors and public information. You can do a background check of:

• The insiders of the company
• Insiders’ past ventures
• The current state of the company, if it’s already operating
• The investment contracts
• The private placement memo or the operating agreements

Investors have the right to receive information from the company before they invest so that an attorney can make follow-up requests for other information, such as financial statements and ledgers.

What Are The Common Risks An Investment Review Can Uncover?

An investment review does not really “uncover” anything. If someone is hiding information, the review can’t access it. For example, you can’t uncover fraud, abuse or any type of undisclosed risks. The results of the review would be limited to risks that have already been disclosed.

It’s also important to note the review can’t guarantee any investments or offer an opinion as to whether an investment is good or bad. However, the review can bring risks buried in the disclosures to your attention.

Companies are required to disclose all material information about the offering. Frequently, they will use a lot of flowery language to obscure the bad information while emphasizing the good. A qualified securities attorney can help you learn how you get a return on your investments, how the company’s insiders are compensated, and your specific voting rights.

An investment review process can raise red flags or discourage investments. A company may refuse when requested to provide more information or get cagey with their answers. Those are red flags that might point to looking for other ways to deploy funds.

Attorney Jared Schneider is an experienced lawyer based in Bloomington, IN, who has helped countless clients just like you navigate the intricacies of investor rights law. With more than a decade of experience, he is prepared to assist you with your investment review so you can invest with confidence.

Still have questions? Ready to get started? Contact Schneider Law, P.C. today to schedule an initial consultation.

Get Your Questions Answered - Call Us For Your Free, 20 Min Phone Consultation (812) 561-7772

How Often Should I Have My Portfolio Reviewed?

A full portfolio review of all investments, public and private, depends on your comfort level. Ideally, you should be working with a team, not just an attorney. You should also be working with a financial advisor and an accountant who can provide investment and tax advice.

You should review your statements and reports regularly with these experts. There could be significant unexplained losses, merger announcements or tender offers. The company may disclose its intention to generate capital with another offering or with debts. Those are all appropriate times to talk to an attorney and see what your options are.

How Can An Experienced Investment Review Attorney Help You Mitigate Financial Complications?

A lot of the investors I’ve worked with over the years sought help too late. They believed representations from insiders and promoters that the investor had specific access to information rights, voting rights and investment participation that ultimately did not align with what they experienced. When we looked at the investment materials, we saw that everything the company did was by the book, and there’s no basis for a lawsuit.

While we can’t help if a company engages in fraud or other types of actionable mismanagement, we can provide you help at the outset before any money changes hands. It’s my job to make sure:

• You understand everything the company discloses to you about making your investment
• You, your financial advisor and your accountant have everything you need to evaluate the investment

If investment losses happen later, you can contact your attorney. They can help you evaluate options to hopefully recover a portion of your investment.

Still Have Questions? Ready To Get Started?

For more information on Demystifying Investment Reviews, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (812) 561-7772 today.