Articles Posted in Oil and Gas Investments

shutterstock_140321293-200x300The Securities and Exchange Commission (SEC) filed a civil action charging Matthew Griffin and William Griffin with fraudulently offering two Texas oil and gas partnerships – Payson Petroleum 3 Well 2014.  The SEC alleges that between November 2013 and July 2014 the Griffins conducted a fraudulent offering of interests raising $23 million from approximately 150 investors for the purpose of developing three oil and gas wells.  The SEC claims that the Griffins misled investors about Payson’s promised participation in the program and other aspects of Payson’s compensation as the program’s sponsor and operator.

According to the SEC, the Griffins authorized offering materials containing numerous misrepresentations and omissions including: i) that Payson would contribute an up-front 20% of the offering amount in the amount of $5.4 million and that this capital infusion would cover 20% of the cost of the wells; ii) that Payson’s consideration as program sponsor/operator/co-investor would be limited to 20% of any petroleum revenue generated by the wells; and iii) that Payson would cover any cost overages beyond the estimated $24 million.

The SEC found these representations to be false because Payson contributed no money to the offering and paid nothing toward the well costs and moreover Payson lacked the financial means to pay even the smallest cost overage.  The program later declared bankruptcy.

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shutterstock_143094109-300x200According to BrokerCheck records financial advisor William Heiden (Heiden), employed by Wedbush Securities Inc. (Wedbush), has been subject to nine customer complaints.  According to records kept by The Financial Industry Regulatory Authority (FINRA) Heiden has been accused by a customers of unsuitable investment advice concerning various investment products including energy stocks including master limited partnerships (MLPs).  The law offices of Gana LLP continue to report on investor related losses and potential legal remedies due to recommendations to investor in oil and gas and commodities related investments.

The most recent claim was filed in June 2017 and alleges that Heiden, breach his fiduciary duty, committed violation of industry rules, and financial elder abuse causing $855,299.  The customer’s accounts were maintained at the firm from September 2013 to April 2017.  The claim is currently pending.  The broker has stated in defense of the claim that market conditions and the collapse of oil prices in 2014 and 2015, resulted in a loss of value of some stock and bond positions in the customer’s account.

In January 2017 a customer alleged that Heiden, that from March 2012 to February 2016, made unsuitable investments in the client accounts causing $950,718 in damages.  The claim is currently pending.

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shutterstock_85873471-300x200According to BrokerCheck records financial advisor Michael Keane (Keane), formerly associated with UBS Financial Services Inc. (UBS), has been subject to nine customer complaints.  According to records kept by The Financial Industry Regulatory Authority (FINRA) Keane has been accused by a customers of unsuitable investment advice concerning various investment products including energy stocks, master limited partnerships (MLPs), and business development companies.  The law offices of Gana LLP continue to report on investor related losses and potential legal remedies due to recommendations to investor in oil and gas and commodities related investments.

The most recent claim was filed in October 2017 and alleges that Keane, from February 2011 to September 2017, disregarded instructions by investing in unsuitable high risk energy stocks and MLPs.  The claim is currently pending.

In November 2016 customers alleged that Keane recommended an unsuitable investment strategy in Energy Stocks, MLP’s and Business Development Companies, and further mispresented the risks associated with this investment strategy.  The claim seeks damages of $4,724,136 and is currently pending.

Our firm handles claims and is also investigating securities claims against brokerage firms over sales practices related to the recommendations of oil & gas and commodities products such as exchange traded notes (ETNs), structured notes, private placements, master limited partnerships (MLPs), leveraged ETFs, mutual funds, and individual stocks.

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shutterstock_80511298-300x218According to BrokerCheck records financial advisor Christopher Sinkula (Sinkula), currently associated with Janney Montgomery Scott LLC (JMS), has been subject to seven customer complaints.  According to records kept by The Financial Industry Regulatory Authority (FINRA) Sinkula has been accused by a customers of unsuitable investment advice concerning various investment products including energy stocks and variable annuities among other claims.  The law offices of Gana LLP continue to report on investor related losses and potential legal remedies due to recommendations to investor in oil and gas and commodities related investments.

The most recent claim was filed in July 2017 and alleges that Sinkula made unsuitable investments by concentrating in energy stocks.  The customer claimed $100,000 in damages and the claim is currently pending.  In 2015 a customer claimed that Sinkula recommended the purchase of annuities and charged excessive fees that were not suitable causing $39,644 in damages.  The claim was denied.

Our firm is investigating potential securities claims against brokerage firms over sales practices related to the recommendations of oil & gas and commodities products such as exchange traded notes (ETNs), structured notes, private placements, master limited partnerships (MLPs), leveraged ETFs, mutual funds, and individual stocks.

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shutterstock_157106939-300x300According to multiple news sources, a private equity fund managed by firm EnerVest Ltd. has lost essentially all of its value.  The $1.5 billion EnerVest Energy Institutional Fund XII closed in 2010 while the $2 billion EnerVest Energy Institutional Fund XIII closed in 2013 appear to be affected by the loss.  The EnerVest Fund XIII fund raised billions and focused on oil and gas and then borrowed $1.3 billion leveraging up the fund at the height of the oil market.  As oil prices declined from more than $100 in 2014 to a low of $26 the value of EnerVest’s assets, which served as collateral on the debt, fell precipitously.

The decline in asset value then triggered repayment demands from lenders that could not be met.  EnerVest has its credit facilities with Wells Fargo for its funds.  In 2015, after the valuation of EnerVest Fund XII fell, Wells Fargo accelerated EnerVest’s debt repayment to $125 million from $20 million.  EnerVest also stated in 2016 that it expected Wells Fargo to require an even larger repayment of Fund XIII in May 2016.

According to sources, investors can expect to be left with at pennies on the dollar.  A loss of this scale for a private equity firm of EnerVest’s size is highly unusual given that there are only a handful of private equity firms worth at least $1 billion that have lost money.

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shutterstock_62862913-259x300The law offices of Gana LLP continue to report on investor related losses and potential legal remedies due to recommendations to investor in oil and gas and commodities related investments.  One particularly hard hit area of the commodities bust have been oil private placements sold by many brokerage firms.  Once private placement that has come under scrutiny by the SEC are the Coachman Energy and Bakken Drilling private placements.

The SEC settled an action where the agency alleged that Coachman Energy Partners LLC failed to adequately disclose its methodology for calculating the management fees and expenses it charged to the funds from 2011 through 2014.  The SEC found that the investment adviser for four private placement oil and gas funds miscalculated by approximately $1.1 million in management fees and $449,000 in management-related expenses.  In addition, the SEC found that Randall Kenworthy, the firm’s CEO, caused Coachman’s inadequate disclosures in documents and in Coachman’s ADV Forms.  Further, there were undisclosed conflicts of interests as one of the funds entered into a transaction with an affiliated entity without proper disclosure or obtaining investor consent.

Bakken Income Fund has raised $20.6 million from 309 investors.  As part of the settlement, Coachman agreed to disgorge over $2 million.  Coachman and Kenworthy are believed to be involved with the following private placement investments:

  • Bakken Drilling Fund III LP
  • Bakken Drilling Fund IV LP
  • Bakken Drilling Fund IVB LLC
  • Coachman Energy Land II LLC
  • Coachman Energy VI LP
  • Coachman Energy VIB LLC
  • Coachman Energy VII Offshore Feeder Fund LTD
  • Coachman Energy VII Onshore Feeder Fund LP

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shutterstock_19498822-200x300The law offices of Gana LLP continue to report on investor related losses and potential legal remedies due to recommendations to investor in oil and gas and commodities related investments.  According to BrokerCheck records, customers have filed about ten complaints with the Financial Industry Regulatory Authority’s (FINRA) against broker Regan Rohl (Rohl), a registered representative with Wells Fargo Advisors Financial Network, LLC (Wells Fargo) out of the firm’s Fargo, North Dakota office location.

Many of the customer complaints against Rohl allege a number of securities law violations including that the broker made unsuitable investments and overcenoncetrated clients in oil & gas related investments among other claims.  The most recent complaint was filed in August 2017 and alleged Rohl recommended an unsuitable portfolio over concentrated in energy sector investments and to hold these investments after they began to decline in value causing $75,000.  The claim is currently pending.

In July 2017 another customer filed a complaint alleging $150,000 in damages.  The claim is currently pending.  In June 2017 a customer alleged that from April 2011 through December 2016, Rohl made unsuitable investment recommendations to buy and concentrate their portfolio of four accounts into oil and gas sector master limited partnerships and closed end funds causing $1,500,000 in damages.  The claim is currently pending.

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shutterstock_178801082-300x200Ameriprise Financial Services, Inc. (Ameriprise) financial advisor Jonathan Mirer (Mirer) has subject to seven customer complaints according to BrokerCheck records.  Mirer has been employed with Ameriprise since July 2016.  According to BrokerCheck the most recent customer complaints allege unsuitable investments and unauthorized trading among other claims.

The most recent complaint was filed in October 2016 and alleges unauthorized trading causing $62,000 in damages.  The complaint was settled.  In April 2016 another investor filed a complaint alleging damages as a result of unsuitable investments in energy stocks.  The complaint was settled.  The securities lawyers of Gana LLP continue to investigate the customer complaints against Mirer.

Our firm is currently tracking a number of brokers that severely concentrated their clients in the oil and gas and commodities sectors which has historically possessed speculative risks due to the volatile nature of commodities prices.  Before making such recommendations, 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 and the volatile nature of commodities.

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shutterstock_188269637-300x200Morgan Stanley financial advisor Michael Fitz-Gerald (Fitz-Gerald) has subject to five customer complaints according to BrokerCheck records.  Fitz-Gerald has been employed with Morgan Stanley since November 2008.  According to BrokerCheck the most recent customer complaints allege unsuitable investments and failure to diversify the portfolio among other claims.

The most recent complaint was filed in February 2017 and alleges investments in energy stocks since 2014 were unsuitable and did not specify damages.  The claim is currently pending.  In February 2016 another customer filed a complaint alleging $50,000 in damages as a result of a failure to diversify the portfolio.  The claim was settled.  The securities lawyers of Gana LLP continue to investigate the customer complaints against Fitz-Gerald.

Our firm is currently tracking a number of brokers that severely concentrated their clients in the oil and gas and commodities sectors which has historically possessed speculative risks due to the volatile nature of commodities prices.  Before making such recommendations, 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 and the volatile nature of commodities.

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shutterstock_22722853-300x204Broker Tom Parks (Parks) has been subject to a massive number of customer complaints alleging many millions in damages.  Parks was associated with Ameriprise Financial Services, Inc. (Ameriprise) until April 2016.  According BrokerCheck the customer complaints largely involve claims of unsuitable investments in oil and gas, variable annuities, and REITs.  In particular, many of the complaints mention master limited partnership (MLPs).  In total, 23 customers have brought complaints involving Parks’ actions.  In addition, Ameriprise terminated Park stating that Parks was permitted to resign while the broker was on heightened supervision for violations of company policy related to suitability, client disclosure, and outgoing correspondence issues.  The securities lawyers of Gana LLP continue to investigate the customer complaints against Parks.

Our clients tell us similar stories that their advisors hyped MLPs and other oil and gas investments 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.

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