Businesses often reach out to investors to assist them with gathering capital for their business without having to pursue other, often stricter, avenues. Those investing in businesses should be aware or their rights and obligations in such transactions.
Investors are currently engaged in a commercial real estate dispute with the developer of a Hard Rock hotel in San Diego. The investors bought condominium units in the hotel, but claim that they lost millions of dollars when the developer sold the units. They allege that the sales were a violation of federal and California securities laws because they failed to file their offering of investment agreements with the SEC and California Department of Corporations. They also claim that the invested money was misappropriated and used for the hotel, rather than the units. The developer claims that they were not purchasing investments, but instead real estate and therefore assumed the risk of losing their money.