Alset EHome International

Kurta Law is investigating brokers who made unsuitable recommendations of shares of Alset EHome International to their clients. Brokers have an obligation to recommend investments that match an investor’s risk profile, and recommending an unsuitably high-risk stock violates securities regulations.

If you lost money on your investment in Alset EHome International, consider contacting a securities attorney. Brokerage firms often require investors to seek remedy through FINRA arbitration rather than civil court. Contact (877) 600-0098 or email info@kurtalawfirm.com to speak to a securities attorney at no cost today.

What is Alset EHome International?

According to the prospectus, Alset EHome International (AEI) is a holding company that, through its subsidiaries, engages in the following:

• Real estate development, including projects in Texas and Maryland
• Digital transformation technology, e.g., e-commerce software
• Biohealth research into neurological and immune system-related diseases, as well as development into consumer products

The company also identifies “innovating and promising” businesses to acquire or to hold majority stake in as part of its business strategy.

Alset EHome International and Aegis Capital Corp.

In 2021, Aegis Capital Corp. served as underwriter for Alset EHome International’s offering of Common Units and Pre-funded Units. Per the prospectus, Common Units consist of the following:

• A share of common stock
• A Series A Warrant, representing the option to purchase a share of common stock in the future
• A Series B Warrant, representing the option to purchase one-half of a share of common stock in the future

Series A and B Warrants expire on the fifth anniversary of their issuance date.

Pre-funded Units are only offered to purchasers of Common Units who would otherwise beneficially own more than 4.99% of the company’s common stock immediately after consummation of the offering. Instead, a Pre-funded Unit consists of one each of pre-funded Series A and Series B warrants, able to be exercised at any time.

What are the Risks Associated with Alset EHome International?

The Common Units and Pre-funded Units offered by Alset EHome International are a more complicated investment than a textbook common stock offering.

Alset EHome International states that it does not “intend to apply for any listing either of the Pre-funded Warrants or the Warrants on the Nasdaq Capital Market or any other securities exchange or nationally recognized trading system,” or expect any market to develop for these securities.

Warrant Expiration and Value

The Warrants and Pre-funded Warrants offered by Alset EHome International “do not confer any rights of common stock ownership on their holders, such as voting rights or the right to receive dividends,” but instead represent the right to acquire shares of common stock at a fixed price in the future.

The prospectus also states that these offerings are speculative, and there is no certainty that these Warrants will ever be profitable for investors to exercise.

Immediate Dilution of Investment Value

The prospectus states that investors who purchase Common or Pre-funded Units will experience “an immediate dilution in net tangible book value of $1.35 per share,” and may experience further dilution in value if the company offers additional equity securities in the future.

Relatedly, future sales of Alset EHome International’s stock could depress its trading price, making it more difficult for the company to make use of equity for acquisitions or to effectively sell equity in the future.

Aegis Capital Corp. Underwriting

Investors should know that Aegis Capital Corp. served as the underwriter for this offering. Underwriters take on risk in exchange for a fee, which could motivate certain investment banks to underwrite investments that pose too much risk for the average retail investor. Additionally, brokers may have conflicts of interest when they recommend shares that are underwritten by an affiliate of their brokerage firm. 

Do You Have Concerns About Your Shares of Alset EHome International?

If you believe Alset EHome International was too risky for your risk profile, consider contacting one of our experienced securities attorneys. Our attorneys regularly take on cases of unsuitable investment recommendations and have a proven track record when it comes to securing fair settlements for our clients. Call (877) 600-0098 or email info@kurtalawfirm.com.