Securities Lawyers Blog

Investor Recovery Options for Crestwood Equity Partners (CEQP) Losses

January 13, 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. Crestwood Equity Partners (Ticker Symbol: CEOP) is a Master Limited Partnership (MLP). Crestwood Equity Partners has declined 75.6% in value from its 52-week high and is trading at only $20.62 a share. Crestwood Equity Partners business focuses in the natural gas midstream 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.

Investor Recovery Options for Teekay Offshore Partners LP (TOO) Losses

January 13, 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. Teekay Offshore Partners LP (Ticker Symbol: TOO) is a Master Limited Partnership (MLP). Teekay Offshore has declined 76% in value from its 52-week high and is trading at only $6.5 a share. Teekay Offshore business focuses in the shuttle tanker 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 as 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. Many of these companies relied upon high energy prices in order to sustain their operations. 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.

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.

Investor Recovery Options for Legacy Reserves LP (LGCY) Losses

January 11, 2016 | by Staff Attorney

The law offices of Gana Weinstein LLP continue to report on investor related losses and potential legal remedies due to unsuitable recommendations to investor in oil and gas and commodities related investments. Legacy Reserves LP (Ticker Symbol: LGCY) is a Master Limited Partnership (MLP). Legacy Reserves LP has declined 90.2% in value from its 52-week high and is trading at only $1.52 a share. Legacy Reserves business focuses in the oil and gas production sector.

About 86% of the total MLP securities market, a $490 billion sector, can be attributed to energy and natural resource companies. Since January 2013, over 30 new MLPs have entered the market. During 2014, 11 oil and gas MLP offerings generated proceeds of $5.1 billion. In recent years these investments have boomed and profited from the low interest rate environment coupled with favorable oil prices. These investments are often pitched to investors as generating income from consistent cash flow streams. In addition, these investments may also be pitched as growth opportunities from companies looking to grow their businesses and increase their distributions.

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.

Hercules Offshore Investor Recovery Options

January 10, 2016 | by Staff Attorney

According to Bloomberg, Hercules Offshore Inc., (Hercules Offshore) is the owner of the largest fleet of shallow-water drilling rigs in the Gulf of Mexico when it filed for bankruptcy in August 2015. Debt issues by Hercules Offshore and drilling rig provider Paragon Offshore were among the worst-performing oil and gas service bonds in the high-yield energy index.

The company plans to use the bankruptcy to cut $1.2 billion in debt and for investors to trade their senior notes for almost 97 percent of Hercules’s equity. In addition, noteholders would also lend the company $450 million to finish building a new oil-drilling rig. Meanwhile, the number of rigs operating in the Gulf of Mexico has fallen by more than half from last year’s high of 63 by August 2015.

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 Navios Maritime Partners (NMM) Losses

January 10, 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. Navios Maritime Partners (Ticker Symbol: NMM) is a Master Limited Partnership (MLP). Navios Maritime Partners has declined 77.6% in value from its 52-week high and is trading at only $3.18 a share. Navios Maritime Partners business focuses in the dry bulk shipping 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 as 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. Many of these companies relied upon high energy prices in order to sustain their operations. 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.

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.

Samson Resources Investor Recovery Options

January 9, 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, bonds, and individual stocks.

The fall of Samson Resources Corp. (Samson Resources) has been called a Wall Street blooper by and editorial in the Wall Street Journal. As a background, private equity firm KKR (Stock Symbol NYSE:KKR) announced the purchase of oil and gas producer Samson Investment Company’s onshore US assets in a 2011 deal worth $7.2 billion. The acquisition occurred when oil prices were near $100 per barrel and small independent shale oil producers were being acquired with PE ratios often above 50 but little to no positive cash flow to show that would justify the valuations. Now four years later and Samson Resources, under KKR’s ownership, has filed for bankruptcy and is currently undergoing restructuring. The August 2015 bankruptcy announcement precipitated a drop in KKR’s stock price of nearly 40%.

Billions of dollars from investors pumped into Samson Resources evaporated with the chapter 11 bankruptcy filing. The company’s planned reorganization intends to wipe out the $7.2 billion invested by KKR and others in a 2011 leveraged buyout. The plan would also nearly erase Samson’s $2.25 billion in bond debt held by Blackstone Group. The continued failure of oil price recovery has reduced credit traders’ view of Samson Resource’s prospects for emerging from bankruptcy as a profitable company.

Investor Recovery Options for Southcross Energy LP (SXE) Losses

January 9, 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. Southcross Energy LP (Ticker Symbol: SXE) is a Master Limited Partnership (MLP). Southcross Energy has declined 76.2% in value from its 52-week high and is trading at only $3.93 a share. Southcross Energy business focuses in the natural gas midstream 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 as 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. Many of these companies relied upon high energy prices in order to sustain their operations. 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.

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.

Franklin High Income Fund Investors May Have a Volatile Road Ahead

January 8, 2016 | by Staff Attorney

The investment attorneys of Gana Weinstein LLP are investigating potential recovery options for investors in the Franklin High Income Fund. The Fund invests in high-yield debt and securities. However, according to a Morningstar analysis the fund declined 9.7% through November 2015, making it one of the worst performers in the high-yield bond fund Morningstar tracks.

An analysis of the Franklin Fund’s woes reveals that there may be more investor pain in the future for the fund. The fund is struggling due to the 2015 sell-off in commodities and energy sectors. The Fund has taken an outsized position in this industry and these assets make up 22% of total portfolio as of October 2015. According to Morningstar, the Franklin Fund’s investment team is not afraid to make big bets in troubled names and may continue to add to its positions. If the bonds bounce back, returns are boosted. But this strategy is not suitable for most investors and can pressure the performance of the fund. In addition, these risks are heightened due to the lack of liquidity for many energy related high yield bonds. Once a position is established it may be difficult for the Fund to back out later.

In addition, the portfolio may appear less risky to investors when looking at the credit quality of its holdings but as was the case in the lead up to the 2008 financial crisis, the ratings are misleading. For example, the Franklin Fund held a 17.2% position in bonds rated CCC or lower and under 1% in unrated bonds. However, according to Morningstar, only 15% of the energy sector holdings are rated CCC or below even though the majority of energy bonds are trading at distressed level pricing and reflecting greater credit risk. Thus, a larger portion of the fund is trading at very distressed levels then would appear by just looking at the credit ratings alone.

Investor Recovery Options for Mid-Con Energy Partners (MCEP) Losses

January 8, 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. Mid-Con Energy Partners (Ticker Symbol: MCEP) is a Master Limited Partnership (MLP). Mid-Con Energy Partners has declined 80.6% in value from its 52-week high and is trading at only $1.4 a share. Mid-Con Energy Partners business focuses in the oil and gas production sector.

About 86% of the total MLP securities market, a $490 billion sector, can be attributed to energy and natural resource companies. Oil and gas and commodities related investments have been recommended by brokers under the assumption that commodities prices would continue to go up. However, due to a combination of forces including slack demand in China and the strengthening dollar, last summer the price of oil & gas plummeted and remains around $40 to this day. 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.

Broker Investigation: Advisor Dennis Riordan

January 7, 2016 | by Staff Attorney

The investment lawyers of Gana Weinstein LLP are investigating customer complaints against broker Dennis Riordan (Riordan). According to Riordan’s BrokerCheck records there are at least 3 customer complaints against Riordan, 1 judgment or lien, and 2 criminal matters. The customer complaints against Riordan allege a number of securities law violations including that the broker made unsuitable investments, excessive trading, and failure to follow instructions among other claims.

The most recent disclosure filed in February 2015 concerns a tax lien for $33,287. Tax liens and judgements are often a sign that the broker cannot manage their own personal finances and may be tempted to recommend high commission products or strategies to clients in order to satisfy debts. The most recent complaint against Riordan was filed in December 2013 and alleges an unsuitable recommendation in a private placement security.

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.