Tag Archives: Negligence

Charles Bonilla Energy Investments

Charles Bonilla of David Lerner and Prudential inappropriately recommended energy sector investments.  If you were a Bonilla investor recommended energy investments please call 303-300-5022  

Between December 2015 and December 2017, while associated with David Lerner Associates, Bonilla recommended investments in energy sector securities without having a reasonable basis to believe those investments were suitable.  This means that Bonilla had insufficient knowledge or that the investments had insufficient financials to be recommended to investors with even the highest risk tolerance.

While these actions occurred while Bonilla was at David Lerner, it is possible that such offending trades also were recommended while Bonilla was a representative for Prudential.

Due to Bonilla’s failure to conduct reasonable diligence in investigating the investments, there were potential risks and costs of the investments, among other things, that Bonilla did not adequately understand. Accordingly, Bonilla violated the rules of FINRA, the regulator overseeing securities brokerages.

Bonilla did not perform reasonable diligence on the fund prior to recommending it to customers. Bonilla could describe little about the fund’s holdings, beyond that some of the fund holdings were “midstream” energy companies.

Bonilla did not know how the fund paid its monthly distributions. Further, Bonilla did not know what, if any, diligence David Lerner Associates performed on the fund or its holdings prior to offering shares of the funds to customers. During the period between the fund’s initial offering in July 2014 and December 2015, the fund’s net asset value declined by more than 40%.

Bonilla also recommended illiquid investments in a limited partnership sold to customers of David Lerner Associates. Limited partnerships are known to be extremely risky investments.  The limited partners for the partnerships in question invested in common unit ownership interests in the partnership. The limited partnership was formed to acquire and develop oil and gas properties located onshore in the US. The partnership was a “blind pool”, meaning at the time of the initial offering the partnership had not identified any properties for acquisition.

Just as with the funds, Bonilla did not perform reasonable diligence on the limited partnerships prior to recommending to his investors. Finra regulators stated, “Bonilla did not know how the partnership generated funds to pay investors monthly distributions. Bonilla did not know how the price of the common units reflected on customer account statements were calculated. Bonilla did not read the full prospectus nor did he review the partnership’s financial statements.”

These offenses constitute suitability fraud.  These high risk investments carry higher commissions with their higher risks.


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 and confidential consultation.

While brokers will unlikely blame the 2020 decline in energy investments on the coronavirus issues, the declines started in advance of the virus and the virus was only a small portion of the decline.

These investments have always been known to be speculative with a potential for large losses.  Heightened commissions or an inattention to risk drove brokers or adviser’s to inappropriately recommend such investments over the past few years.  The losses such investments suffered in 2020 is not first time oil and gas has gone into free-fall.  In fact, the oil and gas industry has suffered equal or greater shocks in the past decade.

In 2016, oil dropped to a price below $30 a barrel.  This happened again in 2020 when some oil futures fell below $0.  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.

In 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).

Regulators have put brokers on notice that oil and gas exchange traded products, ETPs, should not be recommended to average investors.

In sum, these investments are and have always been inappropriately sold to investors looking for moderate investments or otherwise looking to fund retirement or retirement savings.  The investments are and have never been stable.  This was known or should have been known by brokers and investment advisors for years.  Recommendations of oil and gas investments to such moderate investors is motivated either by heightened commissions many of these investments pay or, in some cases, negligence.

The reason brokers continue to misrepresent these investments and recommend to people who do not want such risk is the commission paid.   These investments can pay a broker and brokerage 10 to 20 times the commission that the average stock transaction pays.

Investors in certain ETFs, such as Direxion or USO, may have been inappropriately invested in these historically speculative investments.  Please call to speak to an attorney about whether you are entitled to recovery.

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

American Eagle, BPZ, Buccaneer, Clean Energy Fuels, Climax Energy, Duer Wagner, Earthstone, Ensign Energy Services, Exxon, Fiduciary Claymore, Genal Energy, Hart Resources, Hercules Offshore,  Matador, Milagro Oil and Gas, Noble Energy, Petrobras, Origin Energy, Quicksilver Resources, Sabine, Samson Resources, Sandridge Energy, SBM Offshore, Southern Pacific, Walter Energy and WBH Energy.

Additionally, we are looking at MLPs focusing on energy such as Goldman Sachs MLP (GMZ) or any of the Steelpath investments.

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.