Wall Street’s Latest Bad Deal for Main Street Investors: Non-Traded Business Development Companies (“BDC’s”)

Wall Street’s Latest Bad Deal for Main Street Investors: Non-Traded Business Development Companies (“BDC’s”) First it was Non-Traded Real Estate Investment Trust (Non Traded REITS) and now comes Non-Traded Business Development Companies (“BDC’s”). Originally created in 1980, BDC’s are touted as high yield products with annual payouts of about 8%, diversified assets and flow through tax treatment. BDC’s seek to generate investor returns by making high interest loans to equally high risk corporate borrowers – the types of borrowers who if subjected to bond rating scrutiny would in most instances be classified as “junk”. As an incentive for brokers and broker dealers to sell these products, some BDC’s charge sales loads of 10%. These sales charges also do not include in some instances an additional 2% charge for offering expenses. Investors in such circumstances are then left with having only 88cents out of every $1 invested actually going towards their investment and further result in investors having to generate a return of 12% just to break even. If you invested in a BDC based upon the advice of a broker or investment adviser and you believe such may have been inappropriate for your investment needs or sold to you in a misleading way you may have the right to recover your investment losses or to rescind your original purchase. For a free consultation regarding your situation please call my office at (800) 837-0441.