United Development Funding IV (UDF), a public nontraded real estate investment trust based near Dallas, had its shares suspended on Thursday.
News that the FBI agents had entered its offices and left with boxes of documents pushed the shares down by more than 50% to $3.20, when Nasdaq halted trading.
Earlier, UDF acknowledged that it has been under investigation by the the Securities and Exchange Commission since April 2014 and said it was cooperating with authorities.
This came after hedge fund manager Kyle Bass disclosed that he had taken a short position in the United Development Funding IV REIT, which was sold by RCS Capital and other firms.
Bass, who runs Hayman Capital, introduced a website (UDF Exposed) several weeks ago, and claims the company operates a "Ponzi-like real estate scheme."
CEO Hollis Greenlaw responded to the allegations in early February and said United Development's secured loans are "underwritten based on collateral value, and UDF IV has not had any realized losses in its portfolio."