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Redwood Trust Losses and Lawsuit

Levin Law | 4.11.2020

Levin Law, P.A. Is Investigating Brokerage Firms That Recommended and Sold Redwood Trust, Inc. (RWT) to Customers

The national securities law firm, Levin Law, P.A. (“Levin Law”) is investigating brokerage firms, investment advisors, and other financial institutions that recommended and sold shares in Redwood Trust, Inc. (RWT) to their clients.  Please contact us at (305) 402-9050 or if your stockbroker or other financial professional recommended that you purchase Redwood Trust, Inc. (RWT) and you suffered meaningful losses.  RWT dropped nearly 75% in value over the last month.  Some brokerage firms marketed RWT has being a conservative investment appropriate for risk-averse investors, such as fixed-income senior citizens and those seeking to preserve their capital.

RWT is a Risky Investment

Redwood Trust, Inc. (RWT) is a specialty finance company focused on making credit-sensitive investments in residential mortgages and related assets and engaging in mortgage banking activities. RWT’s stated goal is to provide “attractive” returns to shareholders through a stable and growing stream of earnings and dividends, as well as through capital appreciation. Redwood Trust, Inc. was established in 1994, is internally managed, and structured as a real estate investment trust (“REIT”) for tax purposes.

RWT always had a high risk profile. Unfortunately for many brokerage firm customers, however, many stockbrokers informed their clients that shares in Redwood Trust, Inc. was a “safe” or conservative investment suitable for risk-averse investors.  When making recommendations to purchase securities, financial advisors have the duty to fully explain all important risks of such investments.  Many investment advisors, however, did not disclose the true risks inherent in RWT, resulting in investors thinking that their investments in RWT would not suffer significant losses.  Those investors were justifiably surprised when their so-called “safe” investments dropped around 75% in value during the most recent market decline, resulting in part due to the Covid-19 pandemic.

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