Investment Attorney

Ridgewood Energy Oil and Gas Private Placements

March 23, 2016 | by Staff Attorney

The investment attorneys at Gana Weinstein LLP are investigating the potential unsuitable sales of securities sponsored by Ridgewood Energy Corporation (Ridgewood Energy). Ridgewood Energy is a private upstream oil and gas investment company based in Houston, Texas and Montvale, New Jersey and sponsors several oil and gas private placements and investments.

Ridgewood Energy issued a press release announcing that it had closed its latest private equity fund Ridgewood Energy Oil & Gas Fund III, L.P., its largest fund to date, with total capital commitments of more than $1.9 billion. The Fund is a continuation of Ridgewood Energy’s investment program focused on finding and developing oil in the deepwater Gulf of Mexico. Ridgewood Energy other offerings include Ridgewood Energy Bluewater Institutional Fund, LLC, Ridgewood Energy Bluewater Oil Fund II LLC, Ridgewood Energy Bluewater Oil Fund IV, LLC, Ridgewood Energy Oil & Gas Fund II, L.P., Ridgewood Private Equity Partners Energy Access Fund LLC.

Investors often do not understand the substantial risks of oil and gas 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.

Baytex Energy Corp. (BTE) Investor Loss Recovery

March 19, 2016 | by Staff Attorney

The investment attorneys with Gana Weinstein 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.

Hugoton Royalty Trust (HGT) Investor Loss Recovery

March 14, 2016 | by Staff Attorney

The investment attorneys with Gana Weinstein 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 Hugoton Royalty Trust (Stock Symbol: HGT). Over the past year the trust has suffered a 77% loss in value.

Hugoton Royalty Trust was created in 1998 when XTO Energy Inc. conveyed 80% net profits interests in gas-producing properties located in Kansas, Oklahoma and Wyoming to the trust. The trust was created to distribute monthly net profits related to the 80% net profits interests.

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.

EnLink Midstream Partners, LP (ENLK) Investor Recovery Options

March 7, 2016 | by Staff Attorney

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.

Gana LLP Investigates Raymond James Oil and Gas MLP Recommendations to Clients

March 7, 2016 | by Staff Attorney

The investment attorneys with Gana Weinstein 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. Raymond James in one brokerage firm that has served as an underwriter for many master limited partnerships (MLPs) deals and whose analysts have previously given high ratings to these investments.

Jeff Saut, chief investment strategist, at Raymond James stated that his favorite MLP plays included Yorkville High Income LLP ETF (YMLP) and Yorkville High Income Infrastructure MLP ETF (YMLI). These two funds have plummeted significantly since the recommendation.

Among the individual MLPs that have suffered significant declines and now is in jeopardy of bankruptcy that was promoted by Raymond James analysts is Linn Energy (LINE) and LinnCo (LNCO). Both stocks have plummeted in value by about 98% in value over the last year. For years Raymond James analyst Keven Smith kept a “Strong Buy” rating on Linn Energy. Finally, when the stock had plummeted 50% in value with no sign of recovery Smith downgraded LinnCo to “Outperform” from “Strong Buy” and the price target to $9 from $15. Only in February 2016 when Linn Energy was on the verge of bankruptcy did Raymond James analysts drop the stock to “Underperform.”

Arch Coal Investor Recovery Options

February 22, 2016 | by Staff Attorney

According to Reuters, Arch Coal which is the second-largest U.S. coal miner has filed for Chapter 11 bankruptcy in mid-January. The investment attorneys at Gana Weinstein LLP continue to report on investor losses in commodities related investments. Our firm is investigating potential securities claims against brokerage firms over improper sales practices related to recommendations in commodities products such as bonds, exchange traded notes (ETNs), structured notes, private placements, mutual funds, and individual stocks.

Arch Coal plans to cut $4.5 billion in debt from its balance sheet after suffering through a prolonged coal market downturn. Arch Coal has about 4,600 employees. As we have previously reported, coal related companies around the world are being pushed to the brink of bankruptcy due to the falling prices of commodities. Other bankruptcy filings this year include Walter Energy (Stock Symbol: WLTGQ), JW Resources, Patriot Coal, Xinergy, and James River Coal Co. among others. According to Bloomberg, more than three dozen coal operations have filed bankruptcy in just over three years. Due to a combination of factors the combined market value of U.S. coal company shares shrank to $12 billion in late July 2015 from $78 billion in 2011.

In the case of Arch Coal the company became saddled with debt since its 2011 acquisition of International Coal Group and then was unable to overcome a range of negative market trends including a drop in coal prices. The company expects its mining operations and shipments to continue uninterrupted through the reorganization process. According to sources, 25 percent of U.S. coal industry is currently in bankruptcy.

Broker Investigation: UBS Financial Broker William Carlton

February 18, 2016 | by Staff Attorney

The securities fraud lawyers of Gana Weinstein LLP are investigating customer complaints filed with The Financial Industry Regulatory Authority’s (FINRA) against broker William Carlton (Carlton). According to BrokerCheck records Carlton has been the subject of at least five customer complaints and two judgments or liens. The customer complaints against Carlton allege a number of securities law violations including that the broker made unsuitable investments and misrepresentations among other claims.

The most recent customer complaint filed in October 2015 alleged unsuitable recommendations and concentrated positions in mutual funds, ETFs, and equity investments alleging losses of $1,264,355 in damages. The claim is still pending. Another claim was filed in January 2015 and alleged unsuitable concentrated positions in real estate limited partnerships and oil and gas stocks. In addition, Carlton has a tax lien of $132,060 that was filed in October 2014. Brokers are required to disclose financial matters that impact their personal finances. Substantial judgements and liens on a broker’s record can reveal a financial incentive for the broker to recommend high commission products or services. A broker’s inability to handle their personal finances has also been found to be relevant in helping investors determine if they should allow the broker to handle their finances.

Brokers have a responsibility treat investors fairly which includes obligations such as making only suitable investments for the client. In order to make a suitable recommendation the broker must meet certain requirements. First, there must be reasonable basis for the recommendation the product or security based upon the broker’s investigation and due diligence into the investment’s properties including its benefits, risks, tax consequences, and other relevant factors. Second, the broker then must match the investment as being appropriate for the customer’s specific investment needs and objectives such as the client’s retirement status, long or short term goals, age, disability, income needs, or any other relevant factor.

Investor Recovery Options for Energy & Exploration Partners Losses

February 11, 2016 | by Staff Attorney

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. Energy & Exploration Partners of Fort Worth is seeking Chapter 11 bankruptcy protection after suppliers and service companies sought payment for unpaid bills. The company was founded in 2008 and owns about 61,000 net acres in Texas and Wyoming with the Texas holdings located mostly in Woodbine and Eagle Ford shales. The company made the filings after Schlumberger Technology, Baker & Hughes, and Catcus Pipe & Supply initiated an involuntary bankruptcy against the company.

Energy & Exploration joins several other companies that we have been tracking that have sought bankruptcy protection as oil prices continue to tumble. Energy & Exploration disclosed its debts of at least $1.1 billion assets.

Our firm continues to file complaints on behalf of investors who have been overconcentrated in oil and gas investments. 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.

Investor Recovery Options for High Yield Fund Investors

February 3, 2016 | by Staff Attorney

The investment attorneys of Gana Weinstein LLP are investigating potential recovery options for investors in various high yield “junk” bond funds. InvestmentNews recently published a list of 10 high yield funds that have a high level of exposure to distressed debt:

Federated High Yield Service (FHYTX)
Waddell & Reed High-Income A (UNHIX)

Broker Spotlight: Customer Complaints Against National Securities Corporation Broker James Eichner

January 30, 2016 | by Staff Attorney

The securities lawyers of Gana Weinstein LLP are investigating customer complaints filed with The Financial Industry Regulatory Authority’s (FINRA) against broker James Eichner (Eichner). According to BrokerCheck records there are at least 3 customer complaints that have been filed against Eichner. The customer complaints against Eichner allege a number of securities law violations including that the broker was negligent, breached a fiduciary duty, and churning (excessive trading) among other claims. The most recent customer complaint against Eichner filed in June 2015 alleges that Eichner breached his fiduciary duty and was negligent in the handling of the customer’s account leading to $500,000 in damages. The claim is currently pending.

Brokers have a responsibility treat investors fairly which includes obligations such as making only suitable investments for the client. In order to make a suitable recommendation the broker must meet certain requirements. First, there must be reasonable basis for the recommendation the product or security based upon the broker’s investigation and due diligence into the investment’s properties including its benefits, risks, tax consequences, and other relevant factors. Second, the broker then must match the investment as being appropriate for the customer’s specific investment needs and objectives such as the client’s retirement status, long or short term goals, age, disability, income needs, or any other relevant factor.

The number of customer complaints against Eichner is high relative to his peers. According to InvestmentNews, only about 12% of financial advisors have any type of disclosure event on their records. Brokers must publicly disclose certain types of reportable events on their CRD including but not limited to customer complaints. In addition to disclosing client disputes brokers must divulge IRS tax liens, judgments, and criminal matters. However, FINRA’s records are not always complete according to a Wall Street Journal story that checked with 26 state regulators and found that at least 38,400 brokers had regulatory or financial red flags such as a personal bankruptcy that showed up in state records but not on BrokerCheck. More disturbing is the fact that 19,000 out of those 38,400 brokers had spotless BrokerCheck records.