The investment attorneys with Gana Weinstein 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.
Brokers that have recommended MLPs to investors may have made unsuitable recommendations based upon the yields of these investments rather than the risk to principal. Over the past year MLPs have been hammered due to weaknesses in oil and gas and commodities markets.
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.
Our firm represents securities investors in 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. Investors who have suffered losses may be able recover their losses through securities arbitration. Our consultations are free of charge and the firm is only compensated if you recover.