Investment Lawyer

Mutual Fund Goldman Sachs MLP and Energy Renaissance Fund (GER) Investor Recovery Options

February 16, 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. Our firm has been tracking a number of leveraged Master Limited Partnership (MLP) closed-end funds that have suffered significant losses. Among those funds is Goldman Sachs MLP and Energy Renaissance Fund (NYSE:GER) $1.0 billion in assets. The Goldman Sachs MLP fund opened in September 2014 and has plummeted in value by 75% since then losing hundreds of millions in investor funds.

As a background, about 86% of the total MLP securities market, a $490 billion sector, can be attributed to energy and natural resource companies. In the past year, investors have lost $20 billion in publicly traded in master limited partnerships, publicly traded oil funds. This amounts to an astonishing $8 of every $10 they had invested, according to a report prepared for The Associated Press article. 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.

Mutual Fund First Trust MLP and Energy (FEI) Investor Recovery Options

February 15, 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. Our firm has been tracking a number of leveraged Master Limited Partnership (MLP) closed-end funds that have suffered significant losses. Among those funds is First Trust MLP and Energy Inc (NYSE:FEI) with $943 million in assets. Over the past year the fund has suffered a 43% loss.

As a background, about 86% of the total MLP securities market, a $490 billion sector, can be attributed to energy and natural resource companies. In the past year, investors have lost $20 billion in publicly traded in master limited partnerships, publicly traded oil funds. This amounts to an astonishing $8 of every $10 they had invested, according to a report prepared for The Associated Press article. 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.

Mutual Fund Clearbridge Energy Fund (CEM) Investor Recovery Options

February 12, 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. Our firm has been tracking a number of leveraged Master Limited Partnership (MLP) closed-end funds that have suffered significant losses. Among those funds is Clearbridge Energy Fund (NYSE:CEM), at $1.9 billion in assets. Over the past year the fund has suffered a 50% loss.

As a background, about 86% of the total MLP securities market, a $490 billion sector, can be attributed to energy and natural resource companies. In the past year, investors have lost $20 billion in publicly traded in master limited partnerships, publicly traded oil funds. This amounts to an astonishing $8 of every $10 they had invested, according to a report prepared for The Associated Press article. 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.

Broker Investigation: Customer Complaints Against McNally Financial Broker Marshall Cassedy

February 6, 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 Marshall Cassedy (Cassedy). According to BrokerCheck records Cassedy is subject to 17 customer complaints, 3 regulatory actions, and one employment separation. The customer complaints against Cassedy allege securities law violations that including unsuitable investments, churning (excessive trading), unauthorized trading, misrepresentations, and breach of fiduciary duty among other claims.

The most recent regulatory action was filed by the State of Florida in 2010 and alleged unauthorized trading and unregistered activity. Prior to that, Capitol Securities Management, Inc. terminated Cassedy alleging that the broker had customer complaints concerning violations of the firm’s policies with respect to the handling of their accounts. In 2006, the State of Georgia filed a regulatory action against Cassedy alleging that the broker failed to disclose another regulatory investigation by the State of Florida. That investigation was filed in 2005 and alleged unsuitable securities.

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 Goldman Sachs MLP and Energy Renaissance Fund (GER) Losses

February 4, 2016 | by Staff Attorney

The investment fraud attorneys with Gana Weinstein LLP continue investigate oil and gas and commodities related investment losses. Investors may have potential legal remedies due to unsuitable recommendations by their broker to invest in this speculative and volatile area. Goldman Sachs MLP and Energy Renaissance Fund (Ticker Symbol: GER) is a Master Limited Partnership (MLP) closed-end mutual fund. The Fund opened at about $20 per share in September 2014. However, since that time, due to the fund’s holdings in MLPs, the value for the fund has plummeted to $4.19 representing an almost 80% loss.

About 86% of the total MLP securities market, a $490 billion sector, can be attributed to energy and natural resource companies. According to Bloomberg, many oil companies are in trouble and are going bankrupt as U.S. high-yield debt issued to junk-rated energy companies grew four-fold to $208 billion. The bankruptcies have been devastating causing forced selling at fire sale prices.

Moreover, our firm has been receiving an alarming number of complaints concerning how these speculative investments are being marketed and sold to investors. 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. However, in the past year, investors have lost $20 billion in publicly traded in master limited partnerships and publicly traded oil funds. This amounts to an astonishing $8 of every $10 they had invested, according to a report prepared for The Associated Press article. 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.

Investor Recovery Options for Milagro Oil & Gas Losses

February 2, 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. Milagro Oil & Gas and several of its affiliates filed for Chapter 11 bankruptcy protection in July 2015. At that time, Milagro Oil reported that it had $1 million to $10 million in assets and $500 million to $1 billion in liabilities that it would not be able to pay because its business became unprofitable in light of the decline in the oil market. The company has 1,200 wells in South Texas, Gulf Coast, and in Louisiana. The company plans to sell its oil and gas properties and liabilities to Houston-based White Oak Resources VI for $217 million in cash and equity.

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.

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. 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.

FINRA Bars Broker Marat (a/k/a Matt) Zeltser

February 1, 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 Marat (a/k/a Matt) Zeltser (Zeltser). According to BrokerCheck records there are at least one customer complaint, one regulatory, one investigation, and one employment separation that have been filed against Zeltser. The customer complaints against Zeltser alleges a number of securities law violations including that the broker invested money in triple leveraged ETFs over long periods of time among other claims. The claim is currently pending.

FINRA terminated Zeltser after the broker failed to respond to a letter request for information in August 2015. Prior to that time, in January 2015, FINRA opened an investigation into Zeltser alleging potential willful violations of securities fraud laws and FINRA rules. Prior to that, Zeltser was discharged from Pointe Capital, Inc. for violating the firm’s advertising policy and the use of unapproved communications.

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.

Odebrecht Offshore Drilling Finance Investor Recovery Options

January 30, 2016 | by Staff Attorney

The investment attorneys at Gana Weinstein LLP continue to report on investor losses in oil and gas related investments. 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.

According to Bloomberg, bonds of Odebrecht Oleo & Gas SA (Odebrecht), the oil services arm of Latin America’s largest construction conglomerate plunged to record lows after Petroleo Brasileiro SA, the corruption plagued stated owned oil company, canceled a contract to rent one of its drilling rigs. Odebrecht Offshore Drill Finance’s $1.5 billion of bonds come due in 2022 and are backed by cash flows coming from four drilling rigs. On the news back in September 2015, shares of the bonds fell 12% to about 26 cents on the dollar. Also $550 million in perpetual dollar bonds from Odebrecht Oil & Finance also declined.

More recently, Fitch Ratings has downgraded the senior secured notes issued by Odebrecht Offshore Drilling Finance Ltd. (OODFL) to ‘CCC’, and affirmed the senior secured notes issued by Odebrecht Drilling Norbe VIII/IX Ltd. at ‘B’.

Pharmaceutical Company Zafgen (ZFGN) Investors Suffer Massive Losses After Key Drug Placed on Hold

January 30, 2016 | by Staff Attorney

The investment fraud attorneys of Gana Weinstein LLP are investigating potential legal remedies due to recommendations to investors to buy speculative pharmaceutical company stocks. One such company is Zafgen, Inc. (Zafgen) (Stock Symbol: ZFGN). The stock was trading in the mid $40s just last September but now has plunged to under $6 a share, a staggering loss of shareholder value.

According to Bloomberg, Zafgen announced that its trial of an experimental drug to fight obesity was placed on hold by regulators after a second patient died taking the drug. The trial involves patients with a rare genetic disease called Prader-Willi syndrome that causes overeating. The trial was being studied to for the purposes of having the U.S. Food and Drug Administration approve the drug for those patients. Zafgen had finished one part of the trial that compared the drug to a placebo and then continued to a study where all patients took the drug. However, the FDA has now ordered a complete clinical hold on studies. The news sent the company’s shares down 61% when announced.

Before recommending investments in pharmaceutical 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. Pharmaceutical companies are notoriously risky investments. While investments in big name pharmaceuticals with diversified portfolios of established drugs and products offer greater stability some brokers recommend small bio-technology companies that have only one or two unproven drugs in clinical trials or development. The entire value of the company’s stock for these companies are often tied to the perceived success or failure of the drug. Even slightly downbeat news can send such stocks into a tailspin. However, brokers who recommend risky pharmaceutical companies are obligated to understand the risks of these investments and convey them to clients.

Broker Spotlight: Customer Complaints Against Merrill Lynch Broker John Boukamp

January 22, 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 John Boukamp (Boukamp). According to BrokerCheck records there are at least 10 customer complaints that have been filed against Boukamp. The most recent customer complaint against Boukamp filed in November 2013 alleges that Boukamp, from December 2011 until September 2013 engaged in excessive trading, sometimes referred to as churning, and made unsuitable investments. This complaint was denied. In October 2013, another customer complained and alleged unsuitable investment recommendations and unauthorized trading from June 2012 to September 2012 resulting in a loss of $522,000. The case was resolved with the customer receiving $275,000.

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 Boukamp 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.