Tag Archives: Gas

Geraldine Gordon Investment Loss

The Law Offices of Jeffrey Pederson, PC represents investors suffering losses as the result of adviser mismanagement, such as the investment losses of investors of Geraldine Gordon of Ameriprise.  Ms. Gordon has been accused by FINRA regulators of inappropriately recommending oil and gas investments.  Concentrating such unorthodox investments in an investor’s portfolio can be unsuitable, which is mismanagement of a portfolio and in some cases fraudulent.  Please call 1-866-817-0201 for a free and confidential consultation.

The regulatory filing highlights the plight of one such investor.  On June 2013, Gordon recommended to one of her investors that she liquidate a number of
diversified investments in her Ameriprise brokerage and IRA accounts, which
comprised approximately half (49.9%) of her liquid net worth. Ms. Gordon recommended that
this investor use those assets to purchase a Master Limited Partnership (“MLP”) focused
on the energy-sector. This investment is believed to be an investment in oil and gas.  The MLP’s prospectus described the investment as speculative.

Following Gordon’s recommendation, the investor invested a total of $334,000.00 in the
MLP investment through her Ameriprise brokerage and IRA accounts. The investor’s investment in the MLP comprised a large portion of the investor’s liquid net worth at the time.

blog_gulf_mexico_oil_rigFINRA Rule 2111, the FINRA suitability rule, provides that when recommending the purchase, sale, or exchange of any security to an investor, a securities broker “must have a
reasonable basis to believe that a recommended transaction [...] is suitable for the
customer, based on the information obtained through the reasonable diligence of
the member or associated person to ascertain the customer’ s investment profile.”

Gordon’ s recommendation that her investor invest half of her liquid net worth in this
single sector-focused, in this case an oil and gas, MLP was not suitable for the investor in light of the investor’s financial condition and the excessively concentrated nature of the investment.

Many state regulators have rule the suitability requirement even more restrictively.  Some have limited the investment in such an investment to 10% of the investor’s liquid net worth.

One of the concerns with MLP investments is that many pay an extremely high commission to the broker, which is usually not disclosed.  This can cause some brokers to recommend MLPs despite the inherent risks in the investment to those who cannot afford to take such risks.

MLP Losses

Oil StockWe are investigating losses sustained by investors in Master Limited Partnerships (“MLP”).  This includes all MLP investments including but not limited to UBS ETRACS, Enbridge Energy Partners,  EV Enterprise Partners, and Eagle Rock Energy Partners.  If you have suffered such losses please call toll-free 1-866-817-0201.

MLPs are sometimes referred to as “SSPs” and other names.  There are limited types of investors to whom such investments could be legally sold.  Selling such high-commissioned investments when they contradict the objectives or needs of an investor, making them “unsuitable” for certain investors, is a form of fraud. In August 2015, the SEC conducted an examination of firms selling MLPs.

Among other things, the SEC regulatory examinations revealed several significant deficiencies in the areas of suitability and supervision with respect to all of the examined firms’ recommendations and sales of MLPs to retail investors. Specifically, all of the examined firms: “Failed to maintain and/or enforce adequate controls relating to determining the suitability of MLP recommendations;” and “Failed to conduct both compliance and supervisory reviews of registered representatives’ (“representatives”) determinations of customer suitability in the MLPs, as required by their internal controls.”

MLPs have been increasingly marketed to retail investors, who have been interested in generating income in the low-yield interest-rate environment that has persisted since the financial crisis.  Additionally, MLPs may offer attractive attributes such as partial or full “principal protection” or exposure to a particular asset class.

MLPs often provide for payments determined by reference to other assets or indices and may be more complex than a simple debt instrument with a stated interest rate.  However, these investments have always been known to carry a high degree of risk. A central aspect of a broker-dealer’s duty of fair dealing is the suitability obligation, which generally requires a broker-dealer to make recommendations that are consistent with the best interests of its customer.  So investments must be of the character and have the level of risk that is consistent with these wants and needs.  This “suitability” obligation is a requirement under the  antifraud provisions of the state and federal securities laws, and also requirement of a brokerage firm’s membership in FINRA.  

FINRA also requires brokerages to supervise their representatives, and the Exchange Act, the federal securities law, permits the SEC to sanction broker-dealers who fail reasonably to supervise, with a view to preventing violations of the state and federal securities laws by a person subject to their supervision.  In addition, FINRA has released guidance to help assess the adequacy of controls with respect to MLPs and complex products that members should include in their supervisory and compliance procedures.

For more information on MLPs containing LINN Energy, also known as LINE, see the following: www.jpedersonlaw.com/blog/linn-energy-losses/

Jeffrey Pederson has represented investors in Alabama, Arizona, Arkansas, California, Colorado, Connecticut , Florida, Hawaii, Massachusetts, Montana, New Jersey, New Mexico, New York, North Carolina, Minnesota, Missouri, North Dakota, Rhode Island, Texas, Utah, and Wyoming, in FINRA arbitration actions against securities brokerage firms for unsuitable investments.  Please call for a confidential and free consultation.

 

Oil or Gas Investment Losses

Oil Stock IIJeffrey Pederson, P.C. helps investors determine if they have a right to recover investment losses in oil, gas or other investments.  Please call 1-866-817-0201 toll-free for a free consultation.

In 2016, oil dropped to a price below $30 a barrel.  Many investors simply ignore their losses, believing that the loss is simply due to the market, without knowing that they may be entitled to a recovery.  Such individuals unnecessarily let their plans for retirement or other future plans go unfulfilled because of the financial loss they sustained.

Since late 2014, countless oil, gas and other energy companies have filed for bankruptcy.  Many investors in these companies were illegally sold these investments by brokerage firms motivated by commissions paid by the investments.  Such investments can take many forms including, but not limited to, Master Limited Partnerships (MLPs), common stock, notes, bonds, mutual funds, and Exchange Traded Funds (ETFs).

We are currently investigating investments into the following energy companies:Oil Stock

American Eagle, BPZ, Buccaneer, Climax Energy, Duer Wagner, Hart Resources, Hercules Offshore, Linn Energy, Milagro Oil and Gas, Petrobras, Quicksilver Resources, Sabine, Samson Resources, Sandridge Energy, Southern Pacific, Walter Energy and WBH Energy.

Oil and gas limited partnership losses can do more than take away the hard earned principal of investors, it can also create tax liabilities that the investor was not expecting.  The result is that the investor could lose more than invested.  The following link discusses the risks that in more detail.

Jeffrey Pederson has represented investors in Alabama, Arizona, Arkansas, California, Colorado, Connecticut , Florida, Hawaii, Massachusetts, Montana, New Jersey, New Mexico, New York, North Carolina, Minnesota, Missouri, North Dakota, Rhode Island, Texas, Utah, and Wyoming, in FINRA arbitration actions against securities brokerage firms for unsuitable investments.  Please call for a confidential and free consultation.