Have you lost money in an Oil & Gas Master Limited Partnership, a Shale Bond Investment or other Energy Venture?
Our lawyers help victims of investment adviser negligence or fraud recover losses on energy investments sold as “safe”.
Energy investments are some of the most speculative securities on the market. A recent article in Oil + Gas Monitor says the oil industry is in a “debt crisis.” There may be as much as $500 billion in junk grade debt currently in investors’ portfolios. Popular commentator Porter Stansberry says most of the growth in junk grade debt in recent years is unfortunately tied to the oil and gas industry.
A year ago, crude prices were over $100 per barrel. Today they are under $50. While that is great for consumers, its terrible news for those who invested in the energy sector. Most industry experts agree that unless oil prices rise and stay above $70 per barrel, many oil companies won’t be able to survive.
Act quickly if you invested in these “junk” quality shale bonds
While there are undoubtedly some good investments in the energy sector, in our opinion much of what is offered is junk (very high risk). This is especially true with debt instruments such as bonds. In our opinion, several bonds issued by well-known companies fit this junk category. These include:
- Exco Resources “Exco”
- Swift Energy “Swift”
- Rex Energy “Rex”
- SandRidge Energy “SandRidge”
- Goodrich Petroleum
- Approach Resources
- Magnum Hunter “Magnum”
- Sabine Oil & gas
- Halcon Resources
Still not convinced? The Wall Street Journal reports that the oil and gas industry will lose $4.4 trillion dollars in the next three years. With those losses will come the default of many so-called shale bond offerings and the demise of many oil and gas master limited partnerships.
There is Hope for Oil & Gas MLP or Shale Bond Investors Who Weren’t Warned of High Risks – You May be Entitled to a Refund
Many who invested in the oil and gas sector fully understood that their investments were speculative. Others, however, were duped into purchasing high yield bonds and Master Limited Partnerships (MLPs). Often these were hawked by stockbrokers and financial advisors promising high yields and safety.
For years, both the SEC and the North American Securities Administrators Association have warned brokers to be careful in how they market energy investments. Financial professionals have an obligation to fully understand their customers’ financial needs and risk tolerance. These rules are called Know Your Customer rules.
It isn’t enough to just understand your customers, however. Stockbrokers also must insure that they only recommend “suitable” investments. Unfortunately, some brokers sell these investments to elderly customers, retirees, those looking for safety and those who need access to their funds. For these folks, most oil and gas master limited partnerships or shale bonds are unsuitable.
The good news is that both stockbrokers and the firms that employ them can be held responsible for failing to understand their customers’ needs and for recommending unsuitable investments. They can also be liable for misrepresenting or failing to fully explain the risks of these investments.
For shale bonds and other oil and gas debt instruments, that means failing to tell investors that these investments were highly speculative, considered junk and required high oil or gas prices to remain solvent.
Brokers have a similar obligation to properly explain the risks and dangers of MLPs and direct drilling partnership investments. According to the Associated Press, over the last 12 months investors have lost $8 of every $10 they had invested in MLPs (also called energy partnerships). That figure does not include losses on $37 billion of bonds sold by the partnerships between 2010 and now.
Suspect Oil & Gas Energy Master Limited Partnerships
Some of the energy partnerships we are closely watching include:
- Advisory Research MLP & Energy Infrastructure Fund (MLPPX)
- Advisory Research MLP & Energy Income Fund (INFRX)
- Advisory Research MLP & Equity Fund (INFJX)
- ALPS/Alerian MLP Infrastructure Index Fund (ALERX)
- BP Capital TwinLine MLP Fund (BPMAX)
- Catalyst MLP & Infrastructure Fund (MLXAX)
- Center Coast MLP Focus Fund (CCCAX)
- ClearBridge Energy MLP & Infrastructure Fund Inc. (MLOAX)
- Cohen & Steers MLP & Energy Opportunity Fund (MLOAX)
- Deutsche MLP & Energy Infrastructure Fund (DMPAX)
- Dreyfus MLP Fund (DMFAX)
- Eagle MLP Strategy Fund (EGLAX)
- Goldman Sachs MLP Energy Infrastructure Fund (GLPAX)
- Highland Energy MLP Fund (HEFAX)
- Ivesco MLP Fund (ILPAX)
- James Alpha Yorkville MLP Portfolio (JAMLX)
- MAI Energy Infrastructure and MLP Fund (VMLIX)
- MainGate MLP Fund (AMLPX)
- MainStay Cushing MLP Premier Fund (CSHAX)
- Oppenheimer SteelPathMLP Alpha Plus Fund (MLPLX)
- Oppenheimer SteelPath MLP Select 40 Fund (MLPFX)
- Oppenheimer SteelPath MLP Alpha Fund (MLPAX)
- Oppenheimer SteelPath MLP Income Fund (MLPDX)
- Prudential Jennison MLP Fund (PRPAX)
- Salient MLP & Energy Infrastructure Fund II (SMAPX)
- Salient MLP Fund (SAMCX)
- Spirit of America Energy Fund (SOAEX)
- Tortoise MLP & Pipeline Fund (TORIX)
- Transamerica MLP & Energy Income (TMLAX)
- Westwood MLP and Strategic Energy Fund (WMLPX)
Unsuitable Investments / Misrepresentation / Failure to Supervise
If a stockbroker recommended you purchase shale bonds, oil and gas securities, energy partnerships or MLPs and failed to accurately represent the risks of the investment, you may be eligible to get back your hard earned money. This stockbroker or investment adviser duty includes making full and accurate disclosures and avoiding any misrepresentations.
As noted above, financial professionals have a similar duty to only recommend suitable investments and fully understand their customers’ financial needs.
The broker’s employer can also be liable for failing to supervise financial advisors through the sales and marketing process.
Stockbrokers and brokerage firms have a duty to place their clients’ interests above their own. Simply choosing investments that offer the broker the highest commission is illegal and considered investment fraud.
There Are Time Limits for Claims – Don’t Delay!
Federal law places serious time constraints for filing claims. If you even suspect that your broker may have sold you an unsuitable investment, don’t delay.
Claims are typically handled by binding arbitration before the Financial Industry Regulatory Authority – FINRA. We will handle everything from investigating your case, filing a claim, conducting discovery, presenting evidence, questioning witnesses and prosecuting your case before a three arbitrator panel.
Once a decision has been rendered (typically 14 months from the date of filing), we will diligently work to get any award promptly paid.
Need more information about oil and gas scams and junk shale bonds? Call us to confidentially discuss your options and determine your eligibility to file a claim: or Report Online. There is never a fee or obligation for the initial consultation.