Securities Lawyers Blog
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. Breitburn Energy LP (Ticker Symbol: BBEP) is a Master Limited Partnership (MLP). Breitburn Energy has declined 91.1% in value from its 52-week high and is trading at only $.84 a share. Breitburn Energy 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. While MLPs have the same liquid trading characteristics as common stocks they are very different from typical stock investments. For instance, MLP’s are pass through investment vehicles, that is they pass through the income to the investor without any company level taxation. In addition, while there is no set payout level required to be adhered to by the company, unlike real estate investment trusts (REITs), MLP’s must derive 90% of their revenues from natural resources activities. However, most MLP’s do pay out most of their earnings through distributions causing company growth to come through the issuance of more debt and shares.
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.