Peachtree Hotel Value & Income Fund II


March 19, 2024

Type of alert:

Investors who invest in “alternative” investments such as the Peachtree Hotel Value & Income Fund II and lose money, may be able to recover their losses if their broker misrepresented the safety and liquidity of the investment when pitching it. The Peachtree Fund is a private placement—its operations are insulated from most SEC-imposed registration and reporting requirements. Investing in unregistered securities like the Peachtree Fund comes with substantial risks. Some of those risks include:

  • Misrepresentations as to safety: Brokers often promise investors their money will be safe and they will receive a steady fixed rate of return. This is often not true. Many alternative investments are less safe than blue chip stocks, bonds, mutual funds, and exchange-traded funds.
  • Conflicts of interest: Brokers and investment professionals may have a substantial financial interest in selling private placements to investors. Often private placements pay commissions of 10% or more. So, for a $50,000 investment, the broker may reap $5,000 or more in commission for that single recommendation.
  • Lack of liquidity: Investors may have difficulty redeeming or reselling their shares and may need to hold them indefinitely. If you are a short-term investor or if access to your principal is important, then an alternative investment such as a private placement is not right for you.
  • Risk of total loss: Companies offering private placements are sometimes engaged in high-risk endeavors, exposing shareholders to potential risk of total loss of their investments.
  • Limited price transparency: Because private placements are not publicly traded, there is no fair market value. The price on the statement reflecting principal value usually is inflated compared to the true value.

As a result, private placements like the Peachtree Fund are not suitable for most investors. Due to the numerous risks associated with investing in unregistered securities, private placements generally cannot be sold to non-accredited investors. Accredited investors are investors earning more than $200,000 per year, or who have a net worth of more than $1 million.

Regardless, brokers, investment professionals, and private funds must ensure potential investors are financially sophisticated and fully informed of the risks before offering shares in private placements. ChapmanAlbin has been fighting for investor rights for more than 25 years. If you lost money in the Peachtree Fund or any other private placement, contact ChapmanAlbin for a free consultation.

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