Articles Posted in Oil and Gas Investments

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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shutterstock_175835072The investment attorneys at Gana LLP are investigating the potential unsuitable sales of securities sponsored by APX Energy.  APX Energy claims on its website that it is an independent oil and gas exploration company focusing on the Illinois Basin and other areas in the southern United States. The firm claims over 25 years of experience in the oil and gas industry. The company sponsors several oil and gas private placements.

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.  Alternative investments are only appropriate for a narrow band of investors under certain conditions due to their high costs, illiquidity, and huge redemption charges – 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.

Investors often do not understand the substantial risks of oil and gas limited partnerships and private placements.  As recently reported in Reuters, when offerings by Atlas Energy LP, another issuer of oil and gas private placements were analyzed, investors only get to see 65-70% of their capital actually put to work on oil and gas projects.  Further, the returns on these projects had more in common with running profitable casinos than investments. Reuters found that slightly more than half of 43 private placements Atlas issued over the past three decades investors lost money or just broke even. While investors lost in more than half of the deals in 29 or 67% of those deals, Atlas actually out-performed their own investors.

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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_22722853The 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, Charles Frieda (Frieda) currently with Wells Fargo Advisors, LLC (Wells Fargo) and operating from their offices in Irvine, California has recently received at least 17 customer complaints with similar allegations that the broker overconcentrated them in oil and gas equities, preferred stock, and debt.  Four complaints have been filed against Frieda in 2016 alone.

One of the most popular energy related investments 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.”

Despite the predictions that Wall Street was promoting an oil and gas bubble, our firm is currently tracking a number of brokers that severely concentrated their clients in a single sector which has historically possessed speculative commodities type risk.  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.

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shutterstock_20354401The investment attorneys at Gana LLP are investigating the potential unsuitable sales of securities sponsored by Waveland Capital Group LLC (Waveland), a purported merchant bank with a core investment focus in the oil and gas exploration and production industry. Waveland claims on its website that it invests in oil and gas exploration and development throughout the Mid-Continent and Permian Basin regions. In addition, Waveland invests capital to special private equity opportunities in select sectors such as medical device, health sciences, technology and manufacturing. Waveland has sponsored the following investments:

  • Waveland Drilling Partners Series III
  • Waveland Resource Partners II, L.P.
  • Waveland Energy 2011 Drilling Program
  • H2X Acquisition Partners, LLC
  • Waveland Drilling Partners 2011-A, L.P.
  • Waveland Resource Partners I, L.P.
  • Waveland Drilling Partners 2010-A, L.P.
  • Venture Aircraft, Inc.
  • Endoscopic Technologies, Inc.
  • Waveland Ventures V, LLC (Sonim Technologies)

Investors often do not understand the substantial risks of oil and gas limited partnerships and private placements. As recently reported in Reuters, when offerings by Atlas Energy LP, another issuer of oil and gas private placements were analyzed, investors only get to see 65-70% of their capital actually put to work on oil and gas projects. Further, the returns on these projects had more in common with running profitable casinos than investments. Reuters found that slightly more than half of 43 private placements Atlas issued over the past three decades investors lost money or just broke even. While investors lost in more than half of the deals in 29 or 67% of those deals, Atlas actually out-performed their own investors.

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shutterstock_146470052The investment attorneys at Gana LLP are investigating the potential unsuitable sales of securities sponsored by Bradford Energy Capital (Bradford).  Bradford claims on its website that the company was formed in 1994 to focus on creating investment opportunities in the the oil and natural gas industry.  Bradford Exploration, Inc., Bradford Energy, LLC, and Bradford Energy Capital, LLC have been the managing general partner of 42 limited partnerships which investing more than $270 million in approximately 2,000 oil and natural gas wells, natural gas processing plants, natural gas pipelines, mineral leases, and royalty interests.  Bradford is active in the Appalachian Basin, the Illinois Basin, the Permian and the Western Gulf Basins, and the Williston Basin.

The company sponsors many oil and gas private placements and investments that incorporate Bradford Drilling Associates into the name.  According to public disclosures, brokerage firms that sell Bradford oil and gas interests include Centarus Financial Inc., Commonwealth Financial Network, Sigma Financial Corporation, Sammons Securities, Madison Avenue Securities, Inc, M Financial Holdings Securities, Inc., Lincoln Investment Planning, Berthel Fsher & Company Financial Services Inc., Kalos Capital, Inc., G.F. Investment Services LLC, and Sethi Financial among others.

Investors often do not understand the substantial risks of oil and gas limited partnerships and private placements.  As recently reported in Reuters, when offerings by Atlas Energy LP, another issuer of oil and gas private placements were analyzed, investors only get to see 65-70% of their capital actually put to work on oil and gas projects.  Further, the returns on these projects had more in common with running profitable casinos than investments. Reuters found that slightly more than half of 43 private placements Atlas issued over the past three decades investors lost money or just broke even. While investors lost in more than half of the deals in 29 or 67% of those deals, Atlas actually out-performed their own investors.

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