Oil and gas private placements use some of investors’ money to drill and operate oil and gas wells. Oil and gas DPPs are sponsored and managed either by investment companies or oil and gas exploration companies, each of which may suffer from its own conflicts of interests in structuring the investments due to the very high fees and commissions associated with such investments.
Brokerage firms that sell private placements must conduct due diligence on the investment before recommending it to their clients. The due diligence rule stems from FINRA Rule 2310 the so-called suitability rule, which requires that a brokerage firm must have reasonable grounds to believe that a recommendation to purchase a security is suitable for the customer. This principle is further explained in National Association of Securities Dealers Notice to Members 03-71, which elaborates that a brokerage firm must perform significant due diligence before recommending a private placement investment to any customer(s). By recommending a security to customers, the brokerage firm effectively represents that a reasonable investigation of the merits of the investment has been made.
The following private placements could give rise to an arbitration claim against a stockbroker or financial advisor if the recommendation to purchase them lacked a reasonable basis, or if the investments were sold based on misrepresentations or omissions of material fact:
* Bakken Drilling Fund III LP
* Bakken Drilling Fund IV LP
* Bakken Drilling Fund IVB LLC
* Coachman Energy Land II LLC
* Coachman Energy VI LP
* Coachman Energy VIB LLC
* Coachman Energy VII Offshore Feeder Fund LTD
* Coachman Energy VII Onshore Feeder Fund LP
If you have invested in the foregoing Bakken and Coachman funds, or other oil and gas private placements, and you have suffered losses in connection with your investment (or are currently unable to exit your illiquid investment position without incurring considerable losses), you may be able to recover your losses in FINRA arbitration. Investors may contact a securities arbitration lawyer at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or via email at firstname.lastname@example.org for a no-cost, confidential consultation.