Oakes & Fosher is currently investigating the possible unsuitability associated with equipment leasing products sold by brokers and broker dealers–specifically products under the umbrella of the ATEL Capital Group. These securities, all housed under ATEL Capital Group are private investment funds set up to lease a variety of different equipment such as air crafts, mining, transportation, construction, machine tools, and more.

ATEL Capital Group’s Private Equipment Leasing Funds

  • ATEL Leasing Corporation
  • ATEL Equipment
  • ATEL Investor Services
  • ATEL Securities Corporation
  • ATEL Ventures, Inc.
  • ATEL Properties
  • ATEL Financial Services
  • ATEL Growth Capital Fund I
  • ATEL Growth Capital Fund II
  • ATEL Growth Capital Fund III
  • ATEL Growth Capital Fund IV
  • ATEL Growth Capital Fund V
  • ATEL Growth Capital VI
  • ATEL Growth Capital VI
  • ATEL Growth Capital VII
  • ATEL Growth Capital VIII
  • ATEL Growth Capital IX
  • ATEL Growth Capital X
  • ATEL Growth Capital XI
  • ATEL Growth Capital XII
  • ATEL Growth Capital XIII
  • ATEL Growth Capital XIV
  • ATEL Growth Capital XV
  • ATEL Growth Capital XVI
  • ATEL Growth Capital XVII

Who Purchases These Products?

Oakes & Fosher has reason to suspect that these products have been sold to individuals not suited for them. These ATEL Capital Group products are alternative types of investments. This means that these securities are not sold on public securities exchanges, but rather are privately traded by securities brokers recommending them directly to potential investors. Because they are not traded publicly, these alternative investments are very poorly regulated by broker dealers and regulatory authorities such as the SEC and FINRA. This makes less experienced investors more susceptible to sales techniques that would not otherwise work for publicly traded securities.

One such technique is the allure of exclusivity. Being offered a private investment directly by a securities broker can make an investor feel like their current financial situation qualifies them as a more elite investor than they may actually be. Another sales tactic is presenting the limited amount of time there is to invest. Private investments are usually accompanied by offering periods with a specific start and end date–a fact which securities brokers can use to their advantage. They can convince individuals that there is only a limited amount of time to get on the ground floor of something big.

Equipment Leasing Funds Are Incredibly Speculative

One drawback of these private equipment leasing funds is the nature of the business. These securities’ private nature, and the nature of the equipment leasing business makes these securities incredibly risky. These companies only operate for a finite amount of time–usually five years dedicated to actual business operations with two years dedicated to equipment purchasing and liquidation. During this time, those managing these funds are expected to choose the equipment, purchase it, and then lease it out successfully. This amount of time is not sufficient for most business to actually become successful.

There is also so much that can go wrong with the equipment that those managing the fund purchased. There is a strong chance that the market for the equipment the fund purchased is actually a lot weaker than predicted. The equipment may malfunction in some manner. Or, the the lease holders may default on their payments. If any of these occur, then the incredibly expensive equipment purchased by the fund does nothing but sit around and deprecate in value. When this occurs, it can significantly affect investor distributions and the overall value of the product.

Other Drawbacks Of Equipment Leasing Funds

Like all alternative investments. It is also very difficult to ascertain what the shares are actually valued. Since they are not traded on public exchanges, the value of these investments may be skewed during the fund’s initial offering period in an attempt to raise more capital or attract more investors. Inexperienced investors will most likely lack the ability to see through this and will just take their stock broker’s word on what they are actually worth.

It is also incredibly difficult to withdraw funds from an equipment leasing fund before its liquidation phase. Investors often find it very difficult to liquidate shares directly through the company should the need to do so arise. Those managing the funds usually want to hang onto cash infused until the liquidation phase to fund operations–especially if the company is not doing that well. Because of this, investors might have to look to third party companies looking to purchase their shares. However, these companies often offer investors buy out prices that are significantly less than what investors believe their shares to be currently valued at. Because of this, these products should never be recommended to investors with higher liquidity needs.

Equipment leasing funds such as those housed under ATEL Capital Group are sold due to significant conflicts of interest. Brokers who recommend alternative investments like these can receive up to a whopping 10 percent commission taken straight from the investor’s principal investment. This broker commission is often compounded with other upfront fees that can drain an investor’s principal of as much as 17 percent. After losing that much of your principal investment just for the opportunity to invest in a particular fund, one begins to wonder how beneficial it may actually be to them.

ATEL Growth Capital Fund V

It is the opinion of Oakes & Fosher that ATEL Capital Group’s private investment funds are highly speculative, risky, and illiquid investments that should never be recommended to individuals that are not suited for them. A good example of this is ATEL Growth Capital Fund V. Fund V is a California based company that was formed with the express purpose of equipment financing and acquiring equipment to engage in both equipment lending and purchasing. The company was formed on June 12th 2007 with initial start up capital put forward by the fund’s founding members. The fund later opened an initial offering period in early 2009. This period continued until the end of July 2010. During such time, ATEL Growth Capital Fund V raised $17.1 million in capital. Depending on the exact fees and commissions charged, it is possible that as much as $2.8 million of that went to paying commissions for the broker dealers and additional “due diligence” fees. By the fund’s own financial statements, the assets held by ATEL Growth Capital Fund V almost halved over the span of five years. In 2015, the fund’s assets totaled just $8.6 million, with only 25 percent of that in actual liquid assets. Also the fund had incurred an additional $2.5 million in debt. These numbers show the highly illiquid  and speculative nature of ATEL Growth Capital Fund V, ATEL Capital Group, and equipment leasing funds in general.

Oakes & Fosher Can Help

Many investors are unaware of the legal recourse available to them after losing money due to securities broker fraud and/or negligence. The truth is that investors who have lost money in this fashion may actually be entitled to damages. Oakes & Fosher believes that this product was pushed onto unsophisticated investors that were highly unsuited for the risk and illiquidity associated with the equipment leasing funds housed under the ATEL Capital Group. If you, or someone you know, believe that they were unsuitably invested in any ATEL Capital Group private investment fund, please contact Oakes & Fosher for a free and private consultation. We handle cases on a contingency basis, which means there are no fees charged unless we collect for you.