The legal battles in 2021 marked the beginning of the end for Ferrum Capital Partners as a major player in the bridge financing space. The litigation revealed the firm's precarious financial position.
: Promoters failed to disclose that they were taking high commissions—often 8% —and that the investment notes were not registered with state or federal regulators. Key Figures & Criminal Charges ferrum capital lawsuit 2021
Ferrum then came calling for its $5.25 million breakup fee. The legal battles in 2021 marked the beginning
: A San Antonio-based financial advisor and affiliate. She was reindicted on 14 counts and recently pleaded to federal charges, including using investor funds for personal expenses and paying other investors. Impact and Current Status Key Figures & Criminal Charges Ferrum then came
The lawsuit did not go to a full jury trial. In , the parties announced a confidential settlement. While the terms were sealed, several sources close to the matter (including anonymous comments to Bloomberg Law and Law360 ) indicated:
The 2021 Ferrum Capital lawsuit stemmed from a entered into sometime in late 2019 or early 2020. While the full details of the non-disclosure agreement (NDA) involved restrict public access to some specifics, court records (primarily filed in New York State Supreme Court and the U.S. District Court for the Southern District of New York ) reveal the following:
Investors and analysts noted that the Ferrum situation underscored a specific risk in the "Regulation D" (Reg D) private placement market: information asymmetry. While firms are required to file forms with the SEC when raising capital, the details of loan defaults and internal disputes often remain hidden from smaller investors until the situation has deteriorated significantly.