My Investment Fund Is Gated: What Should Canadian Investors Do?

Restricted access to your money raises questions about liquidity, the recommendation and the records to preserve.

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You asked for your money back. Instead, you learned that redemptions have been suspended, restricted or delayed. For many investors, that is the first moment they understand the difference between an investment’s stated value and its liquidity.

Led by Harold Geller and Matthew W. Taylor, the Sotos Investor Protection Group assists investors in investigating losses involving financial advice, investment products and financial institutions.

What Does It Mean When an Investment Fund Is Gated?

In practical terms, the investor cannot obtain some or all of their money when expected under the fund’s applicable terms. That does not, by itself, mean anyone did anything wrong. But it should trigger questions.

What Were You Told Before Investing?

Go back to the beginning. Was the investment presented as:

safe?
conservative?
income producing?
an alternative to bonds?
appropriate for retirement money?
readily redeemable?

Now compare those descriptions with the investment documentation. The gap between what the investor understood and the actual characteristics of the investment may be significant.

Why Does Liquidity Matter to Investment Risk?

Risk isn’t confined to whether an investment goes up or down. An investment that cannot readily be sold can create serious consequences for someone who needs money for retirement income, taxes, healthcare, a house purchase or other foreseeable expenses. With private equities and private credit, there are many sophisticated risks that are significantly different than buying regular securities, including: limited information, complex structures, fees, illiquidity and valuations determined by managers.

What Records Should You Preserve?

Don’t just download today’s documents. Preserve the materials from before you invested:

presentations;
offering documents;
emails;
texts;
KYC records;
account statements;
advisor notes available to you;
advertisements; and
redemption communications.

Those documents can help answer a critical question: Was this investment appropriate (suitable) for this investor when it was recommended?

Should You Assume Waiting Is Your Only Option?

A gate can eventually be lifted. Or it may reveal a larger problem. Either way, investors should understand their position rather than assuming that waiting is their only option.

For information about our services, see private, gated and complex investments.

You can also read about investment-loss recovery options.

Investor Protection Experience, Backed by Litigation Strength

Harold Geller brings more than 30 years of investor-protection, financial-services and complex-product experience.

Matthew W. Taylor brings complex investment, securities and class action litigation experience, particularly where losses affect many investors or involve several potential defendants.

Frequently Asked Questions

Does a gate by itself establish wrongdoing?

Why do the original documents matter?

The original documents can help answer a critical question: Was this investment appropriate (suitable) for this investor when it was recommended?

Can a gate eventually be lifted?

A gate can eventually be lifted. Or it may reveal a larger problem. Either way, investors should understand their position rather than assuming that waiting is their only option.