Securities Lawyers Blog
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. Rose Rock Midstream (Ticker Symbol: RRMS) is a Master Limited Partnership (MLP). Rose Rock Midstream has declined 69% in value from its 52-week high and is trading at only $16.74 a share. Rose Rock Midstream business focuses in the oil pipelines and storage sector.
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. For example, Dune Energy had reserves valued at more than $1 billion but sold those oil fields for only $19 million. The situation is only getting worse with lenders running out of options to put off debts. Most of these companies are now struggling to stay afloat with oil prices at $45.
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.
However, 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.
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.
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. 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.