Oil and Gas Investments

Gana LLP Investigation: APX Energy Oil and Gas Private Placements

October 18, 2016 | by Staff Attorney

The investment attorneys at Gana Weinstein 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.

Former RBC Broker Lisa Lowi Has Over a Dozen Energy Bond Related Customer Complaints

May 14, 2016 | by Staff Attorney

The securities lawyers of Gana Weinstein 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.

Wells Fargo Broker Charles Frieda Energy Stock Investor Claims

April 23, 2016 | by Staff Attorney

The investment attorneys of Gana Weinstein 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.”

Waveland Oil and Gas Private Placements Loss Recovery

March 31, 2016 | by Staff Attorney

The investment attorneys at Gana Weinstein 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.

Bradford Energy Capital Oil and Gas Private Placements

March 21, 2016 | by Staff Attorney

The investment attorneys at Gana Weinstein 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.

Spirit of America Energy Fund (SOAEX) Investor Recovery Options

January 26, 2016 | by Staff Attorney

The securities lawyers of Gana Weinstein LLP are investigating investors that were recommended to invest in Spirit of America Energy Fund (Stock Symbol: SOAEX) underwritten and promoted by David Lerner Associates. The Fund went public in July 2014 and since that time has fallen from about $10 to only about $4.33 per share, an over 50% loss in less than a year and half.

The Spirit of America Energy Fund states that its investment strategy “seeks to achieve its investment objective by investing at least 80% of its assets in energy and energy related companies Exploration, production and transmission of energy or energy fuels. The Fund will invest in Master Limited Partnerships (MLPs) that derive the majority of their revenue from energy infrastructure assets and energy related assets or activities…”

In the case of Spirit of America Energy Fund as of May 2015, over 90% of the fund was invested in oil and gas related MLPs. In addition, investors recommended to invest in the fund may have to pay a high 5.75% load fee and 1.55% annual expenses. In addition, from information available on the Spirit of America Energy Fund website, for the year ended 2014, over 93% of distributions received by investors are a return of their capital and only 6% of all distributions was a taxable dividend. Thus, part of the reason that the fund has declined so rapidly may possibly be attributable to the fund simply repaying investors from their own funds rather than through funds generated by investments.