Articles Tagged with Oil and Gas

shutterstock_50740552-300x200Our securities fraud attorneys are investigating customer complaints filed with The Financial Industry Regulatory Authority (FINRA) against Howard Brous (Brous) currently associated with Wunderlich Securities, Inc. (Wunderlich) alleging unsuitable investments, common law fraud, and breach of fiduciary duty among other claims.  According to brokercheck records Brous has been subject to six customer complaints, 14 regulatory sanctions, and one employment separation for cause.  The majority of Brous’ regulatory sanctions involve multiple state regulators seeking heightened supervision plans and otherwise restricting Brous’ activities.

In August 2016 a customer filed a complaint stating that they had maintained an account with Brous for over 10 years and that his accounts were over concentrated in unsuitable securities.  The customer alleged damages of $2,500,000.  The claim is currently pending.

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shutterstock_27786601The securities lawyers of Gana LLP are investigating a customer complaints filed with The Financial Industry Regulatory Authority (FINRA) against broker Bruce Slater (Slater).  According to BrokerCheck records Slater has been subject to at least four customer complaints.  The customer complaints against Slater alleges securities law violations that including unsuitable investments and misrepresentations among other claims.   Many of the complaints involve direct participation products (DPPs) and private placements including oil and gas partnerships – including Ridgewood Energy-, non-traded real estate investment trusts (REITs), variable annuities, and other alternative investments.

Our firm has represented many clients in these types of products.  All of these investments come with high costs and historically have underperformed even safe benchmarks, like U.S. treasury bonds.  For example, products like oil and gas partnerships, REITs, and other alternative investments are only appropriate for a narrow band of investors under certain conditions due to the high costs, illiquidity, and huge redemption charges of the products, if they can be redeemed.  However, due to the high commissions brokers earn on these products they sell them to investors who cannot profit from them.  Further, investor often fail to understand that they have lost money until many years after agreeing to the investment.  In sum, for all of their costs and risks, investors in these programs are in no way additionally compensated for the loss of liquidity, risks, or cost.

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shutterstock_182371613The securities lawyers of Gana LLP are investigating a customer complaints filed with The Financial Industry Regulatory Authority (FINRA) against broker Robert Cannon (Cannon).  According to BrokerCheck records Cannon has been subject to at least four customer complaints.  The customer complaints against Cannon alleges securities law violations that including unsuitable investments, negligence, fraud, and breach of fiduciary duty among other claims.

Many of the complaints involve direct participation products (DPPs) and private placements including oil and gas partnerships, non-traded real estate investment trusts (REITs), and other alternative investments.  In a FINRA regulatory action Van Patter was found to have onverconcentrated an investor in alternative investments.

Our firm has represented many clients in these types of products.  All of these investments come with high costs and historically have underperformed even safe benchmarks, like U.S. treasury bonds.  For example, products like oil and gas partnerships, REITs, and other alternative investments are only appropriate for a narrow band of investors under certain conditions due to the high costs, illiquidity, and huge redemption charges of the products, if they can be redeemed.  However, due to the high commissions brokers earn on these products they sell them to investors who cannot profit from them.  Further, investor often fail to understand that they have lost money until many years after agreeing to the investment.  In sum, for all of their costs and risks, investors in these programs are in no way additionally compensated for the loss of liquidity, risks, or cost.

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shutterstock_156562427The securities lawyers of Gana LLP are investigating customer complaints filed with The Financial Industry Regulatory Authority (FINRA) against broker Lisa Lowi (Lowi).  According to BrokerCheck records Lowi has been subject to at least 21 customer complaints with approximately 18 of those complaints being filed in the last two years.  The recent customer complaints against Lowi allege securities law violations including unsuitable investments that relate to concentrations in energy bond related investments.   The complaints in total allege millions in investor losses and damages

As reported by the Wall Street Journal the drop in oil and energy prices and the industry downturn has made it difficult for many companies to refinance their debts.  According to Bloomberg, U.S. high-yield debt issued to junk-rated energy companies grew four-fold to $208 billion.  Most of these companies are now struggling to stay afloat with oil prices at $45. Nonetheless, oil and gas and commodities related investments have been recommended by brokers under the assumption that commodities prices would continue to go up. Some experts are saying that if production volume continues to be as high as it currently is and demand growth weak that the return to $100 a barrel is years away.

Before recommending investments in oil and gas and commodities related investments, brokers and advisors must ensure that the investment is appropriate for the investor and conduct due diligence on the company in order to understand the risks and prospects of the company. Many of these companies relied upon high energy prices in order to sustain their operations.

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shutterstock_103079882The investment attorneys of Gana LLP are investigating investor claims of unsuitable investments in oil and gas related products.  Our firm is currently representing a number of investors who lost substantial savings due to poor advice to concentrate holdings in speculative commodities investments like master limited partnerships (MLPs).  According to Brokercheck records, Andrew Yocum (Yocum) formerly with Morgan Stanley operating from their offices in The Villages, Florida has recently received at least 12 customer complaints with similar allegations that the broker overconcentrated them in oil and gas equities.  Eight complaints have been filed against Yocum in 2016 alone.

One of the most popular energy related investments that have become increasingly popular in the brokerage industry in recent years are MLPs.  MLPs are publicly traded partnerships. About 86% of the total MLP securities market, a $490 billion sector, can be attributed to energy and natural resource companies. There are about 130 MLPs trading on major exchanges that focus on energy related industries and natural resources.

Wall Street loves MLPs because they provide high yields to investors and require companies to pay Wall Street in order to continue to grow.  In 2013 banks earned fees of $890.3 million from MLP issuance.   Bloomberg quoted an analyst stating that “MLPs are Wall Street’s dream,” because “[t]hey’re fee machines.”  Naturally, in order to entice investors to continue to invest in MLPs Wall Street pumps up MLPs every chance they get.  According to Bloomberg, in May 2014 “[a]nalysts predict that 93 of the 114 MLPs in existence will rise in value in the next year…”  Astonishingly, “all but five MLPs are recommended by the majority of the analysts who cover them.”  At that time professionals without conflicts called MLPs “the next great investment debacle” and warned that “many MLP shareholders…may not understand what they’ve gotten into.”

Financial advisors must ensure that the oil and gas and commodities related investments being recommended to their client is appropriate for the investor and conduct due diligence on the company before making the recommendation.  Unfortunately, sometimes adivsors fail to conduct sufficient research or understand the risks and prospects of the company.  Oil and gas and commodities related investments have been recommended by brokers under the assumption that commodities prices would continue to go up.  However, brokers who sell oil and gas and commodities products are obligated to understand the risks of these investments and convey them to clients.

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shutterstock_182054030The investment attorneys with Gana LLP are investigating and representing investors who were inappropriately recommended oil and gas and commodities related investments. Investors may have potential legal remedies due to unsuitable recommendations by their broker to invest in this speculative and volatile area. One royalty trust that has suffered substantial declines is Baytex Energy Corp. (Stock Symbol: BTE). Over the past two years the trust has suffered a 93% loss in value.

Baytex Energy Corp. is an oil and gas company based out of Calgary, Alberta. The company’s business is engaged in the acquisition, development, and production of crude oil and natural gas in the Western Canadian Sedimentary Basin and in the Eagle Ford in the United States.

Our clients tell us similar stories that their advisors hyped oil and gas and commodities high yielding investments without significant discussion of risk. In a recent Associated Press article, common stories of how investors are pitched by their financial advisors on oil and gas investments were reported on. Often times these products are pitched as ways to ride the boom in U.S. oil and gas production and receive steady streams of income.

Financial advisors must ensure that the oil and gas and commodities related investments being recommended to their client is appropriate for the investor and conduct due diligence on the company before making the recommendation. Unfortunately, sometimes adivsors fail to conduct sufficient research or understand the risks and prospects of the company. Oil and gas and commodities related investments have been recommended by brokers under the assumption that commodities prices would continue to go up. However, brokers who sell oil and gas and commodities products are obligated to understand the risks of these investments and convey them to clients.

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shutterstock_20354401The investment attorneys of Gana LLP are investigating investor claims of unsuitable investments in oil and gas related products. Our firm is currently representing a number of investors who lost substantial savings due to poor advice to concentrate holdings in speculative commodities investments like master limited partnerships (MLPs). According to Brokercheck records, William Berg (Berg) with Wells Fargo Advisors, LLC (Wells Fargo) has recently received a customer complaint alleging overconcentrated positions in oil and gas equities.

As a background, MLPs are publicly traded partnerships. About 86% of the total MLP securities market, a $490 billion sector, can be attributed to energy and natural resource companies. There are about 130 MLPs trading on major exchanges that focus on energy related industries and natural resources.

Wall Street loves MLPs because they provide high yields to investors and require companies to pay Wall Street in order to continue to grow. In 2013 banks earned fees of $890.3 million from MLP issuance.   Bloomberg quoted an analyst stating that “MLPs are Wall Street’s dream,” because “[t]hey’re fee machines.” Naturally, in order to entice investors to continue to invest in MLPs Wall Street pumps up MLPs every chance they get. According to Bloomberg, in May 2014 “[a]nalysts predict that 93 of the 114 MLPs in existence will rise in value in the next year…” Astonishingly, “all but five MLPs are recommended by the majority of the analysts who cover them.” At that time professionals without conflicts called MLPs “the next great investment debacle” and warned that “many MLP shareholders…may not understand what they’ve gotten into.”

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shutterstock_102217105The investment attorneys with Gana LLP are investigating and representing investors who were inappropriately recommended oil and gas and commodities related investments. Investors may have potential legal remedies due to unsuitable recommendations by their broker to invest in this speculative and volatile area. One royalty trust that has suffered substantial declines is Pacific Coast Oil Trust (Stock Symbol: ROYT). Since the trust’s inception in May 2012 it has suffered a 95% loss in value.

Pacific Coast Oil Trust is a Delaware statutory trust formed by Pacific Coast Energy Company LP (PCEC) containing interests in California onshore oil properties located in the Santa Maria and Los Angeles Basins. PCEC owns the underlying properties which consist of proved developed reserves and other development potential on the underlying properties most of which is oil and natural gas related production.

Oil and gas royalty trusts, like master limited partnerships (MLPs), invest in the energy and commodities sector. However, unlike MLPs, royalty trusts generate income from the actual production of natural resources such as coal, oil, and natural gas and therefore the cash flows from royalty trusts are subject to swings in commodity prices and production levels causing them to be very inconsistent. Royalty trusts have no physical operations, no management, and no employees. Instead, royalty trusts are merely financing vehicles run by banks that trade like stocks. Another company actually mine the resources and pay the royalties to the trust.

Royalty trusts may be recommended to some investors because of the high yields offered. However, yield alone does not make the investment suitable for most investors. Investors need to know that royalty trusts are very close to pure bets on commodity prices. The value of the trust and its distributions are almost directly correlated to the prices of the underlying commodity, an unstable investment whose value cannot be accurately forecasted. In addition, royalty trusts own royalties only on a finite amount of resources and once the commodity is used up the distributions will fall and eventually reach zero rendering the investment worthless.

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shutterstock_172034843The investment attorneys with Gana LLP are investigating and representing investors who were inappropriately recommended oil and gas and commodities related investments. Investors may have potential legal remedies due to unsuitable recommendations by their broker to invest in this speculative and volatile area. One royalty trust that has suffered substantial declines is Whiting USA Trust II (Stock Symbol: WHZ). Over the past year the trust has suffered a 95% loss.

Whiting Oil Trust II was created in December of 2011 at the height of the oil market and has since suffered staggering losses as oil has tumbled. Recently, the price of the trust to drop below $1 per unit and was delisted.

Oil and gas royalty trusts, like master limited partnerships (MLPs), invest in the energy and commodities sector. However, unlike MLPs, royalty trusts generate income from the actual production of natural resources such as coal, oil, and natural gas and therefore the cash flows from royalty trusts are subject to swings in commodity prices and production levels causing them to be very inconsistent. Royalty trusts have no physical operations, no management, and no employees. Instead, royalty trusts are merely financing vehicles run by banks that trade like stocks. Another company actually mine the resources and pay the royalties to the trust.

Royalty trusts may be recommended to some investors because of the high yields offered. However, yield alone does not make the investment suitable for most investors. Investors need to know that royalty trusts are very close to pure bets on commodity prices. The value of the trust and its distributions are almost directly correlated to the prices of the underlying commodity, an unstable investment whose value cannot be accurately forecasted. In addition, royalty trusts own royalties only on a finite amount of resources and once the commodity is used up the distributions will fall and eventually reach zero rendering the investment worthless.

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shutterstock_168478292The investment attorneys with Gana LLP continue to report on investor related losses in oil and gas and commodities related investments. Investors may have potential legal remedies due to unsuitable recommendations by their broker to invest in this speculative and volatile area.

Among the MLPs that have suffered significant declines is EnLink Midstream Partners, LP (NYSE:ENLK). EnLink Midstream Partners has plummeted in value by about 71% in value over the last year. According to the company’s website, EnLink Midstream Partners has expansive gathering, processing, fractionation, transportation, and logistics assets located in the Barnett, Permian Basin, the Gulf Coast, Eagle Ford, Haynesville, Cana-Woodford, Arkoma-Woodford, Utica, and the Marcellus areas. The company has more than 9,200 miles of gathering and transportation pipelines, 17 processing plants with 3.6 billion cubic feet of net processing capacity, and seven fractionators with 280 million barrels per day of net fractionation capacity. Since the company’s formation in 2014, it has executed approximately $4.3 billion of acquisitions and growth projects.

As a background, The MLP sector had totaled $600 billion in assets at its peak before collapsing to about $300 billion now. According to the Associated Press, investors have lost an astonishing $8 of every $10 they had invested since 2014. The research does not include losses from $37 billion of bonds sold by the partnerships in the five years since 2010 or losses from private placement partnerships. However, banks like Citigroup, Barclays, and Wells Fargo made an estimated $1.1 billion in fees for selling these products to investors.

Our clients tell us similar stories that their advisors hyped MLPs as high yielding investments without significant discussion of risk. In a recent Associated Press article, common stories of how investors are pitched by their financial advisors on oil and gas private placements were reported on. Often times these products are pitched as ways to ride the boom in U.S. oil and gas production and receive steady streams of income.

Continue Reading