Investors in private placement securities, including Cove Capital’s 1031 DST Investments, may have legal claims if their investment was recommended by a financial advisor who lacked a reasonable basis for the recommendation or if the nature of the investment was misrepresented by the stockbroker or advisor.

Cove Capital Investments, based in California, sponsors a range of Delaware Statutory Trust offerings marketed to 1031 exchange investors. This article discusses the characteristics of Delaware Statutory Trust (DST) investments sponsored by Cove Capital Investments, and why investors who were recommended these or similar products by a financial advisor should carefully examine whether that recommendation was appropriate.

1031 DSTs Explained

A 1031 DST investment has three distinct elements.

First, a 1031 Exchange is a tax mechanism that allows a taxpayer who sells business or investment real estate to defer capital gains taxes by reinvesting the proceeds into a qualifying replacement property within a defined timeframe.

Second, a Delaware Statutory Trust (DST) is a legal entity created under Delaware law that holds title to real estate and allows multiple investors to own fractional shares of a property.

Third, these investments are typically sold as private placement offerings — marketed directly to selected investors rather than through public markets — and therefore are not subject to the same regulatory requirements as publicly registered securities.

Together, these features allow investors to purchase fractional interests in institutional-grade real estate — such as warehouses, medical facilities, or net lease properties — and collect income proportionate to their ownership share.

Cove Capital’s Role in the DST Market

According to its website, Cove Capital specializes in providing accredited investors with access to debt-free investment options for their 1031 exchange and direct cash investments. According to its SEC filings, the firm has sponsored numerous offerings, including:

• Cove Net Lease Distribution 44 DST
• Cove LaPlace Dialysis 26 DST
• Cove Shreveport Pharmacy DST
• Cove Essential Missouri 27 DST
• Cove Thistlewood Townhomes DST
• Cove Austin 305 Flats, LLC
• Cove Dulles Distribution DST
• Cove Missoula Multifamily DST
• Cove Essential Net Lease 32 DST
• Cove E-Commerce Distribution DST
• Cove Essential Net Lease 24 DST
• Cove Houston Multifamily 42 DST
• Cove Essential Net Lease 25 DST
• Cove Omaha MSA DST
• Cove Seattle Multifamily DST
• Cove Cocoa Dialysis 31 DST
• Cove Wyoming Distribution DST
• Cove Phoenix Pharmacy DST
• Cove NYC Metro DST
• Cove Airport Distribution 21 DST
• Cove Texas Industrial DST
• Cove Atlanta Medical DST
• Cove Florida Dialysis 22 DST
• Cove Multifamily Income Fund 28, LLC
• Cove Louisville Industrial 19 DST
• Cove Medical Net Lease 43 DST
• Cove DC MSA Medical DST
• Cove San Antonio Multifamily 29, LLC
• Cove Greenville 17 DST
• Cove Fast Food 16 DST
• Cove Essential Net Lease 30 DST
• Cove Net Lease Income Fund 18, LLC
• Cove San Antonio Multifamily 33 DST
• Cove Airport Medical DST
• Cove Debt Free Charlotte Pharmacy DST
• Cove Debt Free Maplewood Industrial DST
• Cove Debt Free Maryland Medical DST
• Cove Debt Free Tacoma Data Center DST
• Cove Debt Free Washington Pharmacy DST
• Cove Debt Free Winston-Salem Distribution DST

The Risks Brokers May Not Fully Disclose

While the tax benefits of a 1031 DST can be appealing, these investments carry significant risks that brokers do not always adequately explain. DST investors have no control over management decisions, cannot refinance or sell the underlying property at will, and may be locked into the investment for seven to ten years or more with little ability to exit early. Unlike direct real estate ownership, DST investors are entirely dependent on the sponsor to manage the asset and navigate changing market conditions.

These investments are also sold as private placements, which means they are generally speculative and illiquid compared to publicly traded securities. Despite these risks, private placements have been popular among certain broker-dealer firms because they generate substantially higher commissions. Total fees, which include commissions, due diligence, and other upfront costs, can range from 7% to 12%, creating financial incentives that may not always align with the investor’s best interests.

When a Recommendation May Give Rise to a Claim

As members of FINRA, brokerage firms and their financial advisors are obligated to perform adequate due diligence before recommending any investment, ensure that investors are fully informed of the risks involved, and conduct a suitability analysis to confirm that the investment aligns with the investor’s stated investment objectives and other criteria, including the investor’s risk tolerance and investment objectives. DST investments are generally inappropriate for retirees or conservative investors who need liquidity, predictable income, or capital preservation — yet these are the very investors to whom such products are frequently marketed.

An unsuitable recommendation, or a misrepresentation about the nature and risks of a DST investment, may give rise to a claim against the recommending broker or brokerage firm through FINRA arbitration.

Investors who wish to discuss a possible claim may contact a securities arbitration lawyer at the Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or via email at newcases@investorlawyers.net for a no-cost, confidential consultation.   The firm has handled numerous cases involving securities and commodities, both in state and federal court and in arbitration. Attorneys at the firm are admitted in New York, Wisconsin and various federal courts around the country, and handle cases nationwide (in cooperation with attorneys located in those states when required by applicable rules).

Pacific Oak previously expressed “substantial doubt” about its ability to continue as a going concern, according to its latest quarterly report on Form 10-Q filed with the U.S. Securities and Exchange Commission (“SEC”) for the quarter ended June 30, 2025.  Also earlier this year, Pacific Oak’s longtime Chief Financial Officer, Michael A. Bender, resigned.

In a more recent SEC filing in November 2025, Pacific Oak described a “difficult financial situation” and reported operating losses of $117.2 million on sales of only $26.56 million.  Pacific Oak also announced that it has initiated a formal review of strategic alternatives. The REIT has significant major debt maturities in the next year, meaning that a large portion of its loans have come due and will have to either be refinanced or paid off.  According to recent reports, Pacific Oak faces more than $512.8 million in debt obligations coming due within the next year, including debts related to bond that it issued that were denominated in Israel shekels.

Pacific Oak has also publicly stated that in October 2025, its Board of Directors formed a special committee of independent directors to evaluate all available strategic options- which could include a merger, recapitalization, listing on a stock exchange, or liquidation.  Pacific Oak has retained investment banking firm Robert A. Stanger & Company Inc. to advise on the process.  

Non-traded REITs like Pacific Oak are generally illiquid investments.  Unlike traditional stocks and mutual funds, non-traded REITs do not trade on a national securities exchange.  Many uninitiated investors in non-traded REITs have come to learn too late that their ability to exit their investment position is limited.  Typically, investors in non-traded REITs can only exit their investment through redemption directly with the sponsor on a limited basis, and often at a disadvantageous price, or through sales in a limited secondary market.   As of April 2025, Pacific Oak’s net asset value or “NAV” per share was reported at $5.72, down from $8.03 in September 2023 and $10.50 in September 2022. This NAV reflects a 23.5% decline from 2022 to 2023 and a further slide into 2025. In online secondary market platform trading, shares have reportedly been traded as low as between $0.48 and $0.75 per share.

Investors who wish to discuss a possible claim concerning Pacific Oak or another alternative investment may contact a securities arbitration lawyer at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or via email at newcases@investorlawyers.net for a no-cost, confidential consultation.  Attorneys at the firm are admitted in New York, Wisconsin and various federal courts around the country, and handle cases nationwide (in cooperation with attorneys located in those states if required by applicable rules). 

This article is intended as ATTORNEY ADVERTISING and is not an official announcement.

Super Micro Computer is a $35 billion high-performance server and storage solutions manufacturer founded in 1993 and headquartered in San Jose, California, in the heart of Silicon Valley. The company originally listed on Nasdaq via a $64 million Initial Public Offering in 2007. Super Micro Computer shares have significantly dropped in value in recent months, although they have recently rebounded to some extent. The Company’s shares peaked in value at $122.90 a share in March 2024 and have since traded at prices as low as below $20 a share.

Super Micro Computer is reportedly a “Rack-Scale Total IT Solutions provider”, offering servers, storage systems, switches, software and global support services. It sells into the following segments: enterprise data centers, cloud computing, artificial intelligence, 5G, and edge computing. Servers and storage systems reportedly accounted for 92% of the company’s net sales in 2023.

Super Micro Computer faced a November 16th deadline to either file its delayed 10-K Annual Report or submit a plan with the Securities and Exchange Commission (“SEC”) to regain compliance (which it has now reportedly submitted). Super Micro Computer had to retain new auditors after Ernst & Young resigned as its accountant in October, citing its disagreement with the wording of certain disclosures in the Company’s public SEC filings.

Super Micro Computer was previously delisted back in 2018, when it was removed from the Nasdaq after an SEC investigation into its revenue recognition practices. The Company’s shares were later relisted after a settlement with the SEC. When shares are delisted, investors still hold their stock, but trading moves to over-the-counter (“OTC”) trading in the so-called “Pink Sheets”- a term left over from the days when stock trades and prices were reported on actual sheets of paper. OTC or “Pink Sheets” stocks trade in a market that generally provides less liquidity than Nasdaq, and the regulations governing OTC markets are less strict than those on major exchanges. This lower regulatory threshold can translate into even less transparency for investors.

The most recent issues for Super Micro Computer coincided with public allegations by an independent investment research firm known as Hindenburg Research (“Hindenburg”). Hindenburg publicly alleged that its investigation purportedly revealed ”glaring accounting red flags, evidence of undisclosed related party transactions, sanctions and export control failures, and customer issues.” This blog has not independently verified the foregoing allegations and is merely quoting them from a publicly-available article on Hindenburg’s website. Also, Hindenburg alleged that [a]ccording to a lawsuit filed in April 2024, Super Micro waited only 3 months after the SEC settlement before restarting ‘improper revenue recognition,’ ‘recognizing incomplete sales,’ and ‘circumvention of internal accounting controls’”.

Investors who wish to discuss a possible claim may contact Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or via email at newcases@investorlawyers.net for a no-cost, confidential consultation. The firm has handled numerous cases involving securities and commodities, both in state and federal court and in arbitration. Attorneys at the firm are admitted in New York, Wisconsin and various federal courts around the country, and handle cases nationwide (in cooperation with attorneys located in those states when required by applicable rules).

THIS ARTICLE IS INTENDED AS ATTORNEY ADVERTISING AND IS NOT AN OFFICIAL ANNOUNCEMENT

According to an article that appeared in The Wall Street Journal on April 4, 2022 GWGH is reportedly preparing to file for Chapter 11 bankruptcy in the coming days. A bankruptcy filing would likely cause delays in payments of interest and principal to holders of GWGH L Bonds, and might also imperil the repayment of principal in whole or in part.

GWGH reportedly has about $1.6 billion in principal value of L Bonds outstanding. While no one knows for sure where L Bond investors will land in the event of a bankruptcy, the publication Investment News has reported that one anonymous GWGH L bond investor estimates that the GWG L Bonds would be worth 20 to 30 cents on the dollar if GWGH files for bankruptcy.

The possible bankruptcy is just the latest adverse event surrounding GWGH. Only last week, GWGH announced that it could not timely make its annual report filing with the Securities and Exchange Commission. GWGH has now failed to timely file annual reports with the SEC in three of the past four years. Further complicating matters, GWGH currently has no auditor. It last auditor, Grant Thornton, resigned in December 2021.

As previously discussed on this blog, on February 14, 2022 GWGH officially defaulted on its obligations to L Bond investors and confirmed in a letter to investors that it will not be making monthly interest or maturity payments on its GWGH L Bonds, or accepting redemption requests, while it continues to identify and evaluate restructuring alternatives with its advisors. Now it appears that this unspecified “restructuring alternative” will be a declaration of bankruptcy.

GWGH L Bonds are high-yield life insurance bonds used to finance the purchase of life insurance on the secondary market. Any type of investment in the secondary life insurance market is an extremely risky investment. While GWCH reportedly has close to $1 billion in tangible assets, the company also has over $1.5 billion in outstanding L Bonds, plus $327.7 million owed in senior credit facilities.

GWGH is a Dallas-based financial services firm that offers a variety of ‘services including life insurance and alternative investments. GWGH sold millions of dollars’ worth of L Bonds over the past several years, including sales to public investors through brokerage firms. L Bonds are a financial product that purportedly offers higher yields than typical publicly traded bonds. L Bonds are sold by life insurance companies that buy back the policies from policyholders. The bonds are supposed to help finance the purchase of the policies. According to a prospectus published by GWGH for the offering of $2 billion of L Bonds, the bonds were sold with varying maturity terms ranging from 2 years to 7 years, with interest rates ranging from 5.50% to 8.50%.

Broker dealers are required to perform adequate due diligence on any investment they recommend. They must ensure that all recommendations are suitable for the investor. Recommendations should be in line with the investor’s age, risk tolerance, net worth, and investment experience. If brokerage firms fail to adequately disclose risks or make unsuitable investment recommendations can be held liable for investment losses.

Investors who wish to discuss a possible claim involving GWGH securities may contact a securities arbitration lawyer at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or via email at newcases@investorlawyers.net for a no-cost, confidential consultation. Attorneys at the firm are admitted in New York, Wisconsin and various federal courts around the country, and handle cases nationwide (in cooperation with attorneys located in those states if required by applicable rules).

This article is intended as ATTORNEY ADVERTISING and is not an official announcement.

The expensive insurance that consumers are prompted to opt in or out of when they book online travel on popular websites is big business- and, according to lawsuits and a U.S Senator, airlines and others may be illegally profiting from travel insurance by receiving a portion of the premiums paid by consumers for the insurance. The practice of sharing insurance premiums may violate some state laws, and customers of airlines and online travel booking websites may have viable legal claims as a result.

Two major airlines, Delta and JetBlue – are named as defendants in class action lawsuits alleging that that the companies are not disclosing to their customers that they profit by receiving a portion of the premiums from the sales of travel cancellation insurance policies endorsed on their websites. In addition, according to court records, American Airlines appears to have entered into a settlement in a case involving the receipt of a portion of travel insurance premiums paid by customers. .

These lawsuits follow allegations by U.S. Senator Edward J. Markey of Massachusetts that online website and travel agencies induce consumers to buy travel insurance with minimal coverage and numerous exclusions by requiring them to affirmatively accept or reject travel insurance before completing a purchase of a plane ticket. In addition to JetBlue and Delta, the following airlines reportedly sell travel insurance:

Alaska Airlines

Frontier Airlines

United

Online travel agencies that sell travel insurance reportedly including the following:

Cheaptickets

Expedia

Hotwire

Orbitz

Priceline

Travelocity

The practices focused on by Sen. Markey’s report include the sharing of insurance premiums between insurers and the airlines and online travel agencies. However, the airlines and travel agencies did not furnish specific information concerning revenue sharing to Sen. Markey’s staff, so the report makes no specific findings on this point. Two insurers- AIG Travel Guard and Allianz Global Assistance — reportedly provide travel insurance for 13 of the airlines and online travel agencies reviewed in Sen. Markey’s report (including those listed above). Sun Country airlines and website CheapOAir reportedly use a different travel insurance provider, Trip Mate.

Consumers with questions about possible legal claims concerning travel insurance purchases from airlines or online travel agency websites may contact Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or via email at newcases@investorlawyers.net for a no-cost, confidential consultation.

Investors who have lost money in Woodbridge Wealth or in any of the Woodbridge Mortgage Funds may be able to pursue recovery of their losses through securities litigation or FINRA arbitration. Since the news of Woodbridge’s bankruptcy and a lawsuit filed by the Securities and Exchange Commission broke in late 2017, facts have emerged suggesting that Woodbridge investors have likely lost a substantial portion of their principal. Further, although so-called First Position Commercial Mortgages (“FPCMs”) and Woodbridge units are securities according to state and federal regulators, Woodbridge FPCMs were not registered as securities with government regulators as required by law, and in many instances were sold by unregistered, unlicensed persons.

In other instances, stockbrokers and financial advisors who were licensed and associated with Financial Industry Regulatory Authority (FINRA)-registered firms sold Woodbridge securities to investors, notwithstanding the fact that the Woodbridge securities were not registered.

FINRA arbitration claims have reportedly been filed against the following stockbrokers and investment advisors concerning alleged sales of Woodbridge securities:

Broker Firm Location

Frank J. Capuano Royal Alliance Holyoke, Massachusetts

Frank R. Dietrich Quest Capital Springfield, Virginia

Peter D. Holler Securities Service Network Bristol, Tennessee

Alan New Nylife Securities Fort Wayne, Indiana

Christopher Wendel S.A. Stone Wealth Mgmt. Celina, Ohio

A registered person who sells a security away from his or her firm without first obtaining written approval from the firm violates FINRA Rule 3270, and a registered person who engages in an outside business activity without prior notice to his or her firm, including the sale of non-securities products, violates FINRA Rule 3280. Associated persons are required to report, in writing, any and all types of business that they plan to conduct away from their brokerage firms, whether or not it involves a security, and to obtain written approval from their firms before they sell any security, including securities in the form of promissory notes.

In such cases, brokerage firms have typically taken the position that Woodbridge securities were sold without their knowledge or authority in what is typically referred to as a “selling away” scenario. However, denying knowledge of a broker’s activity (or the fact that the activity may be unauthorized) does not absolve a brokerage firm from its obligation to supervise all activities of its associated persons. Financial Industry Regulatory Authority rules including FINRA Rule 3110 have established that firms must properly supervise brokers’ activities while they are registered with the firm. If they fail to do so, the brokerage firms can be held responsible for the activities of their representatives and, thus, could be ordered to compensate their clients for losses sustained for the period they were registered with the firm.

The following Woodbridge investments could give rise to an arbitration claim against a stockbroker or financial advisor (or their employer/brokerage firm) if the recommendation to purchase them lacked a reasonable basis, or if the investments were sold based on misrepresentations or omissions of material fact:

* WMF Management, LLC

* Woodbridge Group of Companies, LLC

* Woodbridge Mortgage Investment Fund 1, LLC

* Woodbridge Mortgage Investment Fund 2, LLC

* Woodbridge Mortgage Investment Fund 3, LLC

* Woodbridge Mortgage Investment Fund PA, LLC

* Woodbridge Group of Companies, LLC (DBA Woodbridge Wealth)

Investors in any Woodbridge fund who have suffered losses and purchased Woodbridge securities may be able to recover their 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 newcases@investorlawyers.net for a no-cost, confidential consultation.

Investors with losses in Summit Healthcare REIT (“Summit”), a non-traded real estate investment trust (Non-Traded REIT), may have arbitration claims if a broker or advisor made a recommendation to purchase the shares without a reasonable basis or misled the customer as to the nature of the investment. Summit, headquartered in Lake Forest, California, invests in a diversified, income-producing portfolio of assets in the healthcare sector, focusing its investments on operators of senior housing facilities in the United States. Summit acquires, leases, and manages healthcare real estate and invests in the healthcare sector and diversifies by property type, location, and tenant. Publicly-available information suggests that shares of Summit have significantly decreased in value and are now worth less than $2 a share.

MacKenzie Realty Capital has reportedly offered to purchase up to 330,000 shares of Summit for only $1.34 per share in a tender offer – which would leave investors who sold facing a significant loss on the original purchase price. Secondary market providers that allow investors to bid and sell illiquid products such as Non-Traded REITs value Summit shares at between $1.50 and $1.56, and the sponsor estimates their value at $2.53 a share.

Unfortunately for many investors in Summit, it would appear that any attempt to exit their illiquid investment will incur a substantial loss. Aside from their illiquid nature, non-traded REITs also present significant additional risks. One of these risks has to do with their high cost. In most instances, non-traded REITs are sold through a network of independent broker-dealers and associated financial advisors, who earn steep commissions (ranging up to 10%) on sales of non-traded REITs to investors. In addition to the sales commission charged, non-traded REITs typically charge other expenses, including certain due diligence and administrative fees (that can range anywhere from 1-3%).

According to studies, non-traded REITs have historically underperformed even safe benchmarks, like U.S. treasury bonds – meaning that non-traded REITs, on average, provide very low returns relative to the risk investors take of losing their principal. Further, while sold to retail investors around the country by independent broker dealers, alternative investment products like oil and gas partnerships, REITs, and equipment leasing programs are actually seldom suitable recommendations for ordinary retirees and other investors of modest means and limited risk tolerance.

Many retail investors may have bought into non-traded REITs without first being fully informed of the risks associated with these complex and illiquid investments. As members and associated persons of FINRA, brokerage firms and their financial advisors must ensure that adequate due diligence is performed on any investment that is recommended to investors. Further, firms and their brokers must ensure that investors are informed of the risks associated with an investment, and must conduct a suitability analysis to determine if an investment meets an investor’s stated investment objectives and risk profile.

The attorneys at Law Office of Christopher J. Gray, P.C. have significant experience in representing investors who have incurred losses in connection with non-traded REITs, including recovering losses through FINRA arbitration, as well as litigation. Investors may contact our office at (866) 966-9598 or via email at newcases@investorlawyers.net for a no-cost, confidential consultation.

As recently reported, the Colorado Division of Securities (“Division”) is reviewing Woodbridge Mortgage Investment Funds 1, 2, 3, and 3A (collectively, the “Woodbridge Funds”) and related entities in connection with possible sales of unregistered securities. The Woodbridge Funds are offered by Woodbridge Wealth of Sherman Oaks, CA, through a nationwide network comprised primarily of independent broker-dealers and financial advisors. In addition to its investigation into the Woodbridge Funds, the Division is reportedly also conducting a parallel investigation into other individual named Respondents, including James Campbell, Jr. of Woodland Park, CO, Timothy McGuire of Highlands Ranch, CO, and Ronald Caskey of Firestone, CO.

The Division is focused on possible Colorado securities violations stemming from the alleged sale of unregistered securities (that were not exempt from registration), the alleged solicitation of investments in the Woodbridge Funds by unlicensed representatives, as well as alleged fraudulent statements and omissions of material fact concerning sales of the Woodbridge Funds to Colorado investors. The Division has alleged that the named Respondents — Messrs. Campbell, McGuire and Caskey — have raised approximately $57 million in investor capital from approximately 450 Colorado residents, and further, continue to solicit and advertise to potential investors through both online and radio advertisements. Of note, Ronald Caskey bills himself as a “finance professional” on his website, with a focus on retirement planning. Mr. Caskey hosts the Ron Caskey Radio Show and Bible Views Radio Show on stations in Denver, CO, Colorado Springs, CO, in addition to Evansville, IN.

The Division is reportedly reviewing marketing so-called “First Position Commercial Mortgages” (or “FPCMs”) to various investors through issuing promissory notes in exchange for investments that backed certain hard money loans secured by commercial real estate. The Woodbridge Funds allegedly hired Messrs. Campbell, McGuire and Caskey as sales agents in Colorado, despite the fact that none of these named Respondents were/are licensed to solicit or sell securities. Moreover, the Division has alleged that the FPCM’s, although secured by notes and thus falling within the definition of a security, are neither registered as a security, nor exempt from registration. Other allegations concerning reported sales of unregistered securities by Woodbridge are reportedly being reviewed by state regulators in Massachusetts, Texas, and Arizona.

In reviewing Woodbridge, the Division has reportedly focused on the lack of proper registration (of the FPCMs as securities), lack of proper licensure of the named Respondents, qualification of the fund managers of the Woodbridge Funds, and the ability of the respective funds to pay back investors in the event of a default(s) on an underlying commercial loan(s).

Attorneys at Law Office of Christopher J. Gray have significant experience handling cases concerning unregistered securities and private placements. If you have invested in any of the Woodbridge Funds, or otherwise purchased a First Position Commercial Mortgage through investing in a Woodbridge promissory note, from a FINRA-registered stockbroker or financial advisor, or were steered into making such an investment by a stockbroker or financial advisor, you may be able to recover investment losses in FINRA arbitration. To find out more about your legal rights and options, contact a securities arbitration attorney at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or newcases@investorlawyers.net for a no-cost, confidential consultation.

A private equity fund managed by firm EnerVest Ltd. focused on oil and gas investments has reportedly lost essentially all of its value. EnerVest Energy Institutional Fund XII (which closed in 2010) and EnerVest Energy Institutional Fund XIII (which closed in 2013)- both of which raised over $1 billion equity capital- appear to be affected by the loss.

With crude oil prices declining from more than $100 in 2014 to as low as $26, and currently hovering around $50 a barrel, the value of EnerVest’s assets, which served as collateral on its substantial debts, dropped substantially. This loss of collateral reportedly caused Enervest’s lenders to make repayment demands that could not be met, precipating its demise.

When a broker and/or brokerage firm recommends an oil and gas investment to a client, the financial advisor should first ensure that the investor is aware from the outset of the volatile nature of an oil and gas investment (essentially, such an investment is a commodity play attached to the price movement of oil). Further, the financial advisor has a duty to determine if the investment is suitable in light of the investor’s profile and stated investment objectives. In addition, in instances where an investor’s account becomes over-concentrated in oil and gas investments, of a broker fails to disclose the risks associated with such an investment or investment strategy, the broker and his or her firm may well be liable for losses on the investment.

The attorneys at Law Office of Christopher J. Gray, P.C. have significant experience in representing investors in non-conventional investments, including oil and gas-linked investments. Depending on the facts and circumstances, investors may be able to recover their 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 newcases@investorlawyers.net for a no-cost, confidential consultation.

On May 15, 2015, the Wisconsin Department of Financial Institutions, Division of Securities (the “Division”) entered an Order against Respondent insurance agents Jace McDonald, Peter Viater, and Derek Anderson, in connection with private placement sales of life settlements to Wisconsin investors. Additionally, the Division named Conestoga Life Settlements, Conestoga International, Conestoga Trust, and Conestoga Member Services as related entities (collectively, “Conestoga”) in the enforcement action.

Messrs. McDonald, Viater, and Anderson all allegedly maintained independent contractor agreements with Conestoga pursuant to which they agreed to “market the products and services of Conestoga” and, further, to refer all suitable clients for Conestoga’s products and services. The Division alleged that Conestoga agents, including McDonald, made certain misstatements and misrepresentations to investors by implying that the life settlements being sold through a private placement offering were safe and would mature like a CD, that the return of principal was guaranteed, and that Conestoga was “contractually obligated” to pay on the private placement investment being offered.

Life settlements (or viaticals) are generally regarded as illiquid and risky investments. In fact, Conestoga’s own offering documents, including a private placement memorandum (PPM), reportedly stated that a life settlement is a “HIGHLY SPECULATIVE INVESTMENT. IT IS DESIGNED FOR SOPHISTICATED INVESTORS WHO ARE ABLE TO BEAR THE ECONOMIC RISK OF THE LOSS OF THEIR INVESTMENT IN THE LIFE SETTLEMENT INTEREST AND IS NOT INTENDED AS A COMPLETE INVESTMENT PROGRAM.”

The primary risk associated with investing in life settlements (or viaticals) concerns the possibility that the insured (who has sold his or her life insurance policy to the investment sponsor) will outlive the money set aside by the sponsor to pay for continued life insurance premiums. In such a scenario, the investors in the life settlements are then obligated to pay future premiums in order to ensure that the policy remains in force until maturity. When some investors refuse to pay, the remaining investors are left to cover higher premium payments, or else allow the policy to lapse. Additionally, investing in a private placement carries considerable risk — including the illiquid nature of the investment — and, therefore, is typically only available to accredited and/or sophisticated investors, as explicitly referenced in the Conestoga PPM.

The Division alleged that Messrs. McDonald, Viater, and Anderson violated applicable Wisconsin securities law, as well as Regulation D, an SEC rule which governs private placement investments and ordered them to “disgorge any all commissions, profits, or any other moneys received by them as compensation for making offers and/or sales of Conestoga life settlement interests to Wisconsin investors….”

The attorneys at Law Office of Christopher J. Gray, P.C. have significant experience in representing investors who have incurred losses in connection with losses in non-conventional investments. Investors may contact our office at (866) 966-9598 or via email at newcases@investorlawyers.net for a no-cost, confidential consultation.

Increasingly, hackers are breaking into retail brokerage accounts in order to steal investor assets or make illegal trades. This rise in cyber-generated theft and fraudulent securities schemes and activities has prompted the Securities and Exchange Commission (“SEC”) to begin tracking cyber-related criminal activity more closely. In June 2017, the SEC appointed Stephanie Avakian and Steven Peikin as new co-directors of enforcement.Ms. Avakian has indicated that the SEC has started to see an ‘uptick’ in the overall number of investigations involving allegations of cyber crime. Accordingly, the SEC has begun to gather data and statistics about cyber crimes in order to better confront the problem and spot broader market-wide trends and issues.

On September 25, 2017, the SEC announced two cyber enforcement initiatives designed to directly address cyber threats and, by extension, protect retail investors. Specifically, the SEC will create a ‘Cyber Unit’ to identify and target cyber-related misconduct and, furthermore, will establish a ‘Retail Strategy Task Force’ designed to enforce initiatives that will impact retail investors.

SEC Cyber Unit

The Cyber Unit will seek to enhance the SEC’s ability to detect and investigate cyber threats. In particular, the Cyber Unit will focus on certain cyber-related misconduct, including the following:

• Market manipulation schemes involving false information spread through electronic and social media;
• Hacking activity for the purpose of obtaining material nonpublic information;
• Violations involving distributed ledger technology and initial coin offerings with respect to the crypto-currency arena;
• Misconduct perpetrated using the dark web;
• Intrusions into retail brokerage accounts;
• Cyber-related threats to trading platforms and other critical market infrastructure.

Retail Strategy Task Force

The Retail Strategy Task Force will seek to develop proactive initiatives designed to protect retail investors. Specifically, the task force plans to leverage lessons learned from the enforcement division’s investigations and cases. The team will include enforcement personnel across the U.S., including the SEC’s National Exam Program and the Office of Investor Education and Advocacy.

FINRA’s Prioritization of Cybersecurity for Brokerage Firms

In addition to the SEC’s enhanced scrutiny, the Financial Industry Regulatory Authority (“FINRA”) is also making cybersecurity a top priority for brokerage firms. Specifically, FINRA has recognized that cybersecurity threats remain one of the most significant risks many firms face, and in 2017, FINRA will continue to assess firms’ programs to mitigate those risks.

If your broker or financial advisor recommended an oil and gas investment(s), and you have sustained losses in connection with that energy product(s), you may be able to recover your losses through FINRA arbitration. According to data and statistics disseminated in February 2017 by Oilfield Services counsel at Haynes and Boone, LLP, a total of 118 bankruptcies have been filed by North American oil and gas companies since early 2015. Further, the data indicates that the total amount of aggregate debt administered in oilfield services bankruptcy cases (spanning early 2015 – early 2017) is approximately $20.7 billion, with an average debt load of $175 million in each case.

With the recent collapse in energy prices (in 2014, a barrel of crude oil was trading around $90-$100 – currently crude is hovering around $50 per barrel), many oil and gas companies are encountering severe financial distress after leveraging their balance sheets in order to fund exploration, drilling and related operations. Predictably, this overleveraging his contributed to another ‘boom and bust’ cycle in the energy markets, leading some companies to file for bankruptcy protection. Some of the largest reported bankruptcy cases involve total debt of approximately $2.8 billion (Vantage), $2.5 billion (Paragon Offshore), $2.1 billion (Tervita), $1.7 billion (Seventy Seven Energy), $1.7 billion (C&J), $1.3 billion (Hercules Offshore), $1.1 billion (Basic Energy Services), $1.0 billion (Key Energy Services), and $1.0 billion (Toisa Limited).

When a broker and/or brokerage firm recommends an oil and gas investment to a client, the financial advisor should first ensure that the investor is aware from the outset of the volatile nature of an oil and gas investment (essentially, such an investment is a commodity play attached to the price movement of oil). Further, the financial advisor has a duty to determine if the investment is suitable in light of the investor’s profile and stated investment objectives. In addition, in instances where an investor’s account becomes over-concentrated in oil and gas investments, of a broker fails to disclose the risks associated with such an investment or investment strategy, the broker and his or her firm may well be liable for losses on the investment.

According to the Bankruptcy Monitor, all of the following oil and gas companies have at least $650 million in unsecured debt, and many have over $1 billion in unsecured debt:

• Sandridge Energy, Inc.;
• Breitburn Operating LP;
• Linn Energy, LLC;
• Memorial Production Partners L.P.;
• Atlas Resource Partners, L.P.;
• Swift Energy Company;
• Pacific Exploration & Production Corp.;
• Troublesome Creek Gas Corporation;
• Ultra Petroleum Corp.;
• Energy XXI Ltd.;
• Enquest PLC;
• Stone Energy Corporation;
• Samson Resources Corporation;
• Sabine Oil & Gas;
• Chaparral Energy Inc.;
• Berry Petroleum Company, LLC;
• Penn Virginia Corporation;
• Bonanza Creek Energy, Inc.;
• Vanguard Natural Resources, LLC;
• Midstates Petroleum Company, Inc.;
• Halcon Resources Corporation;
• Venoco, Inc.;
• Quicksilver Resources;
• Magnum Hunter Resources Corporation;
• Milagro Oil & Gas, Inc.

The attorneys at Law Office of Christopher J. Gray, P.C. have significant experience in representing investors in non-conventional investments, including oil and gas-linked investments. . Depending on the facts and circumstances, investors may be able to recover their losses in FINRA arbitration, and in some instances, securities litigation. Investors contact a securities arbitration lawyer at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or via email at newcases@investorlawyers.net for a no-cost, confidential consultation.

According to publicly-available SEC filings (from May 2016), Sierra made a tender offer to purchase up to 1,005,447 shares of its issued and outstanding common stock. In connection with this tender offer, 855,215 shares were validly tendered at a price equal to $8.04 per share. Unfortunately, for many investors in Sierra, it would appear that the tender offer price represents a significant loss on the initial capital investment.

In January 2017, the Financial Industry Regulatory Authority (“FINRA”), as part of its ongoing efforts to ensure the integrity of financial markets and offer protection to investors, issued certain guidance through its ‘2017 Regulatory and Examination Priorities Letter.’ Among those concerns highlighted by FINRA were issues related to so-called ‘alternative’ investments such as non-traded real estate investment trusts (“REITs”) and non-traded business development companies (“BDCs”):

“While these products can be appropriate for some customers, certain non-traded REITs and unlisted BDCs, for example, may have high commissions and fees, be illiquid, have distributions that may include return of principal, have limited operating history, or present material credit risk arising from unrated or below investment grade products. Given these concerns, firms should make sure that they perform and supervise customer specific suitability determinations. More generally, firms should carefully evaluate their supervisory programs in light of the products they offer, the specific features of those products and the investors they serve.”

BDCs were created by Congress in 1980 as a means to stimulate investment in small, privately owned American companies that had limited access to the credit solutions and financing available to larger, more established companies. Non-traded BDCs, such as Sierra, offer the average investor access to investing in the debt of private companies, a so-called ‘nontraditional’ asset class historically only available to institutional and/or sophisticated high-net-worth investors.

While non-traded BDCs may seem at first blush like an attractive investment option, as noted by FINRA the investment vehicles carry considerable risk. Some of these risks include very high up-front commissions and fees to the recommending broker and his or her brokerage firm, as well as liquidity concerns. Before recommending an investment in an alternative product such as a non-traded BDC, a brokerage firm is required to first perform adequate due diligence on the investment itself. Further, the broker and brokerage firm are responsible for ensuring that any such investment is suitable in light of the investor’s risk profile, including their age and investment time horizon, income level and net worth, prior experience and sophistication with investing, and investment objectives and risk tolerance.

Sierra is a non-traded BDC that invests primarily in first lien senior secured debt, second lien secured debt, and certain subordinated debt of middle market companies across a broad range of industries with annual revenue between $50 million and $1 billion. Sierra is externally managed by SIC Advisors LLC, an investment advisor registered under the Investment Advisers Act of 1940. SIC Advisors LLC is affiliated with Medley Management (NYSE: MDLY, “Medley”). Medley operates a national direct origination franchise through which it seeks to market investment in its financial products, including Sierra. As of December 31, 2016, Sierra reported that it had raised in excess of $900 million in connection with its equity capital raise.

Investors in Sierra Income Corporation or other non-traded BDCs who wish to discuss a possible legal claim may contact our office at (866) 966-9598 or newcases@investorlawyers.net for a no-cost, confidential consultation.

SANTANDER’S ROLE IN THE CRISIS

In late 2015, Banco Santander’s broker-dealer subsidiary, Santander Securities, agreed to pay as restitution $4.3 million to certain of its clients who suffered losses on investments in Puerto Rico bonds. In addition, the Financial Industry Regulatory Authority (“FINRA”) indicated that Santander’s brokerage unit would also be on the hook for $2 million in fines in connection with its failure to properly supervise its employees. FINRA has estimated that, in total, restitution and penalties levied against Santander will total approximately $6.42 million. Santander’s violations go back to 2012, when Moody’s downgraded Puerto Rico’s General Obligation Bonds to a notch above junk status, in light of the island’s growing fiscal crisis. Only one month prior to this downgrade, Santander had begun selling off its own inventory of Puerto Rico bonds. Despite the fact that Santander recognized the real risks embedded in these Puerto Rico bonds, Santander’s brokers and investment advisors nevertheless continued to push Puerto Rico debt as an appropriate investment to its retail clients. In ordering Santander to pay fines and restitution for losses incurred by retail investors (retail clients purchased about $180 million of the bonds directly and approximately $101 million through various closed end fund offerings at Santander) FINRA noted that Santander had failed to disclose any of the risks embedded in the bonds to its clients, and moreover, that the bank had failed to supervise the use of margin loans to leverage the purchase of even more bonds. FINRA further noted that this risky use of margin loans resulted in certain retail investors piling margin debt on top of shaky Puerto Rico debt. In some instances, Santander brokers even sold Puerto Rico bonds directly from their own accounts to retail investors.

FINRA ARBITRATION AS AN AVENUE OF RECOVERY

Certain arbitration cases filed with FINRA allege that Santander Securities, and other banks and broker-dealers including UBS, Merrill Lynch and Popular Securities, sold unsuitable Puerto Rico bonds to its retail clients or over-concentrated customer accounts in PR-linked investments. In particular, Santander Securities often concentrated its clients in Puerto Rico closed end bond funds. Even after the 2012 downgrade, Santander and other similarly situated banks and broker-dealers failed to adequately supervise their customer’s purchases of Puerto Rico bonds, the concentration of these investments, and the use of margin by some investors to purchase even more Puerto Rico bonds through leverage.

If you have invested in Puerto Rico bonds and you have suffered significant losses as a result, you may be able to recover your losses in FINRA arbitration. To find out more about your legal rights and options, contact a securities arbitration lawyer at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or newcases@investorlawyers.net for a no-cost, confidential consultation. On May 3, 2017, Puerto Rico filed for a form of bankruptcy protection pursuant to a federal law passed in 2016 known as Promesa. This law allows for Puerto Rico to facilitate a debt restructuring process in court that is akin to U.S. bankruptcy protection. This marks the first time in our nation’s history that a U.S. state or territory has taken such extreme fiscal measures. As it stands, Puerto Rico owes approximately $123 billion in debt and pension obligations, a huge figure that dwarfs the $18 billion bankruptcy filed by the city of Detroit in late 2013. While some of the investors in Puerto Rico debt include sophisticated banks and hedge funds (many sophisticated investors did not start aggressively snapping up Puerto Rico debt until 2014, when many bonds were already trading at a deep discount), numerous retail investors were solicited by their broker or investment advisor to purchase Puerto Rico bonds due to their tax free nature and hefty yields. While the lure of triple tax exempt income (income on Puerto Rico bonds is exempt from federal, state, and local taxes) helped firms like UBS, Merrill Lynch, Morgan Stanley and Santander in their sales pitch to prospective retail investors, often Mom and Pop investors were left unaware and uninformed as to the significant risks associated with investing in Puerto Rico bonds.

SANTANDER’S ROLE IN THE CRISIS

In late 2015, Banco Santander’s broker-dealer subsidiary, Santander Securities, agreed to pay as restitution $4.3 million to certain of its clients who suffered losses on investments in Puerto Rico bonds. In addition, the Financial Industry Regulatory Authority (“FINRA”) indicated that Santander’s brokerage unit would also be on the hook for $2 million in fines in connection with its failure to properly supervise its employees. FINRA has estimated that, in total, restitution and penalties levied against Santander will total approximately $6.42 million. Santander’s violations go back to 2012, when Moody’s downgraded Puerto Rico’s General Obligation Bonds to a notch above junk status, in light of the island’s growing fiscal crisis. Only one month prior to this downgrade, Santander had begun selling off its own inventory of Puerto Rico bonds. Despite the fact that Santander recognized the real risks embedded in these Puerto Rico bonds, Santander’s brokers and investment advisors nevertheless continued to push Puerto Rico debt as an appropriate investment to its retail clients. In ordering Santander to pay fines and restitution for losses incurred by retail investors (retail clients purchased about $180 million of the bonds directly and approximately $101 million through various closed end fund offerings at Santander) FINRA noted that Santander had failed to disclose any of the risks embedded in the bonds to its clients, and moreover, that the bank had failed to supervise the use of margin loans to leverage the purchase of even more bonds. FINRA further noted that this risky use of margin loans resulted in certain retail investors piling margin debt on top of shaky Puerto Rico debt. In some instances, Santander brokers even sold Puerto Rico bonds directly from their own accounts to retail investors.

FINRA ARBITRATION AS AN AVENUE OF RECOVERY

Santander Securities, and other banks and broker-dealers including UBS and Merrill Lynch often sold unsuitable Puerto Rico bonds to its retail clients. In particular, Santander Securities often concentrated its clients in Puerto Rico closed end bond funds. Even after the 2012 downgrade, Santander and other similarly situated banks and broker-dealers failed to adequately supervise their customer’s purchases of Puerto Rico bonds, the concentration of these investments, and the use of margin by some investors to purchase even more Puerto Rico bonds through leverage. If you have invested in Puerto Rico bonds and you have suffered significant losses as a result, you may be able to recover your losses in FINRA arbitration. To find out more about your legal rights and options, contact a securities arbitration lawyer at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or newcases@investorlawyers.net for a no-cost, confidential consultation. The attorneys at Law Office of Christopher J. Gray, P.C. are admitted in New York and Wisconsin but will also accept cases in other jurisdictions, including Puerto Rico, often working with co-counsel who are admitted in those jurisdictions.

DISTINGUISHING A PRIVATE PLACEMENT FROM OTHER INVESTMENTS

When an investor decides to purchase shares in a publicly traded company, or for that matter purchase shares in a mutual fund or exchange traded fund (“ETF”), he or she will have the opportunity to first review a comprehensive and detailed prospectus required to be filed with the SEC. When it comes to a private placement, however, no such prospectus need be filed with the SEC – rather, these securities are typically offered through a Private Placement Memorandum (“PPM”).

The majority of private placements are offered under an exemption from registration requirements known as SEC Regulation D (“Reg D”). Among other things, Reg D provides certain safe-harbor exemptions to securities registration, and furthermore specifies the amount of money that can be raised in an offering, as well as the type of investor who may be solicited to invest in such a non-public offering. With certain exceptions, only retail investors who meet the “accredited investor” standard are permitted to invest in a private placement. Rule 501 defines an accredited investor as any person whose net worth exceeds $1,000,000 (excluding their residence), or alternatively who has income in excess of $200,000 per year ($300,000 jointly with a spouse) for the two most recent years.

Private placements might involve investing in a company’s stock in the form of shares, preferred stock, or even a debt instrument such as a bond, promissory note or debenture offering. When making an investment in a private placement, you should first receive and carefully review the PPM. The PPM is required to disclose all material facts about the investment. Any misrepresentation or any omission of a material fact necessary to make the statements in the PPM not misleading could give rise to liability where an investor suffers losses and the PPM is misleading or omits certain critical information.

SOME RISKS AND RED FLAGS ASSOCIATED WITH PRIVATE PLACEMENTS

An investor considering a private placement should be aware of their risks and be on the lookout for any potential red flags. In fact, the Financial Industry Regulatory Authority (“FINRA”) has previously issued an investor alert to inform the public about the risks and the potential for fraud and sales abuse concerning private placements.

To begin, FINRA has cautioned that by virtue of their limited offering documents (PPM versus more detailed prospectus), private placements will likely only provide prospective investors with limited information concerning a company and its financials. In addition, FINRA has warned investors about the illiquid nature of most private placement investments — before investing, an informed investor should first determine if he or she can allow their money to remain tied up for an extended period of time (usually several years) because private placement securities cannot be easily resold due to restrictions on their resale and the lack of a public market such as a stock exchange on which to sell them.

FINRA has also alerted investors to be very cautious of any private placements that you hear about through spam email or cold calling. Often, this is a red flag and a sign of fraud, and an investor should proceed with the utmost caution.

HAVE YOU INVESTED IN SECURITIES THROUGH A PRIVATE PLACEMENT?

If you have purchased unregistered securities through a private placement – and you have suffered considerable losses due to what you believe involved fraud, sales abuse or an unsuitable recommendation by a broker – you may be able to recover your losses in FINRA arbitration. To find out more about your legal rights and options, contact a securities arbitration attorney at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or newcases@investorlawyers.net for a no-cost, confidential consultation.

FINRA charges that the notes, known as strategic return notes or “SRNs”, were linked to a Merrill Lynch proprietary volatility index. During 2010 and 2011, the firm allegedly sold approximately $168 million worth of the SRN notes to its retail customers, promoting them as a hedge against potential downturns in the equities markets.

FINRA charges that included in the costs associated with the notes was the “execution factor,” a feature of the Index intended to replicate transaction costs incurred in the simulated buying and selling of S&P 500 Index options. According to FINRA, these transaction costs allegedly accrued on a daily basis and totaled 1.5 percent per quarter, but were not disclosed in the offering materials for the SRNs. FINRA charges that in buying the notes, a reasonable retail customer would have considered it important that the execution factor imposed these costs.

Investors with questions about their rights may contact a securities arbitration attorney at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or newcases@investorlawyers.net for a no-cost, confidential consultation.

According to the SEC, UBS sold about $548 million dollars of “reverse convertible notes” between 2011 and 2014 to more than 8,700 unsophisticated and relatively inexperienced customers. The SEC charges that the reverse convertible notes were sold to many customers for whom there were unsutiable, including retirees.

To settle the SEC’s claims, UBS has reportedly agreed to pay a $6 million civil fine, $8.23 million in disgorvement of its gains, and nearly $800,000 in interest, bringing the total payment to $15 million.

When a broker recommends that a client purchase or sell a security, the broker must have a reasonable basis for believing that the recommendation is suitable for the investor. Recommendations of reverse convertible note investments could be unsuitable if made to investors for whom the notes posed an inappropriate risk.

If you believe you have been the victim of stockbroker misconduct, you may wish to consult an attorney to find out more about your legal rights and options. Investors may contact a securities arbitration attorney at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or newcases@investorlawyers.net for a no-cost, confidential consultation.

In one such case involving a retiree, UBS accumulated large positions in preferred stocks and similar Instruments. Of note, UBS substantially concentrated these investments in preferred stocks in the financial sector. The Statement of Claim filed with FINRA alleged that a reasonable investor would not have realized that the Account was heavily invested in preferred stocks and similar securities exposed to massive losses in the event of dislocation in the U.S. financial sector. The monthly statements for the Account at relevant times did not call attention to this fact, and instead reflected that a significant portion of the Accounts assets were invested in Afixed income@ (which an ordinary customer justifiably understands to mean investments that were significantly safer than stocks).

As of early 2008 the preferred securities in the Account were worth a total of

approximately $140,000. As the tumultuous year 2008 progressed, however, these securities rapidly lost value. As the broader financial system entered into a period of extreme volatility in the September through November 2008 time frame and following, the Account=s substantial investment in Lehman Brothers preferred stock lost almost all of its value. These losses occurred after Lehman Brothers= decline and eventual epic bankruptcy filing, even as UBS itself allegedly continued to sell Lehman securities to its customers, underwrite such securities, and conceal the true risks of insolvency that threatened the existence of Lehman Brothers.

The sale of these instruments was reportedly rife at the beginning of the financial crisis in 2007 and 2008. Merrill Lynch, Morgan Stanley and other brokerage firms sold billions of dollars of preferred stock issued by Freddie Mac and Fannie Mae. Many investors were lead to believe that these were conservative investments watched over by the U.S. Government and they were never informed about the deteriorating financial condition of Freddie Mac and Fannie Mae. During the sub-prime mortgage crisis, the federal government took over Fannie Mae and Freddie Mac placing them into conservatorship. This left preferred shares investors with essentially worthless investments.

Investors who believe that may have been the victim of a sales practice violation involving preferred stocks may contact InvestorLawyers.net attorneys by filling out the form below or e-mailing newcases@investorlawyers.net.

According to a Wall Street Journal article, there have been a total of 36 reported oil and gas company bankruptcies in 2015. The price of oil has dropped to $30-$35 per barrel or lower (a ten year low), which is leaving many oil and gas companies vulnerable. The bankruptcy cases so far involve $13 billion in secured and unsecured debt. Sixteen of the bankruptcies were reportedly filed in Texas, four each in Delaware and Colorado and the rest in Louisiana, Alaska, Massachusetts and New York and six in Canada.

Some of the companies that declared bankruptcy include: RAAM Global Energy Co., Endeavour International Corp. (ENDRQ), Quicksilver Resources Inc. (KWKAQ), Sabine Oil & Gas Corp. (SOGCQ), Hercules Offshore Inc. (HEROQ), Cal Dive International Inc. (CDVIQ), Dune Energy Inc. (DUNRQ), BPZ Resources Inc. (BPZRQ), ERG Intermediate Holdings LLC, American Eagle Energy Corp. (AMZGQ), Saratoga Resources Inc. (SARAQ), Milagro Oil & Gas Inc., and Miller Energy Resources Inc. (MILLQ). Canadian companies that entered bankruptcy include Verity Energy Ltd., Gasfrac Energy Services Inc., Southern Pacific Resource Corp., Laricina Energy Ltd., and Shoreline Energy Corp.

Several other companies, although not bankrupt, have reportedly hired restructuring advisors and consultants. These companies include: Vantage Drilling Co. (VTG), U.S. Shale Solutions Inc., Paragon Offshore plc (PGN), Midstates Petroleum Co. (MPO), Swift Energy Co. (SFY), Venoco Inc., Energy XXI Ltd. (EXXI), and Magnum Hunter Resources Corp. (MHR).

When a broker recommends that a client purchase or sell a security, the broker must have a reasonable basis for believing that the recommendation is suitable for the investor. In making this assessment, a broker must consider the investors income and net worth, investment objectives, risk tolerance, and other securities holdings. Recommendations of oil and gas companies with a high risk of loss of principal may be unsuitable for investors who cannot tolerate these risks.

If you believe you have been the victim of stockbroker misconduct, you may wish to consult an attorney to find out more about your legal rights and options. Investors may contact a securities arbitration attorney at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or newcases@investorlawyers.net for a no-cost, confidential consultation.

Lee has been registered with the securities industry for eighteen (18) years. He has previously been registered with Securities America from 2000-2002; ePlanning Securities from 2002-2004; Berthel, Fisher & Company from 2004-2007; and most recently Lee was registered with Independent in San Mateo California from 2007-2015.

According to FINRA, in 2012 a customer claimed that Lee allegedly made misrepresentations regarding the suitability of investing in TICs in 2007, resulting in a loss on the customer’s investment. The parties later settled the matter in 2014 for $132,500. In 2013, another customer made similar allegations against Lee resulting in another settlement for $186,000. In the most recent complaint made against Lee, a customer again made allegations of unsuitable investment recommendations and misrepresentations regarding TICs. The matter is still pending with FINRA, the customer is seeking $400,000 in damages.

Many of the supposed benefits of the TICs that are touted by brokers selling TICs are the tax benefits (investors could defer capital gains on real estate transactions involving the exchange of properties) and guaranteed moderate return for the investments. These “benefits” are oftentimes outweighed by the risks posed by TIC investments. For instance, investments in TICs are tied to the real estate market making the investment far from safe or guaranteed. In addition, TICs have very limited liquidity, and the up-front fees associated with structuring and sale of TICs often has the effect of diminishing the customer’s effective capital investment.

In January 2012 FINRA released a regulatory notice assessing the risk in TICs stating there is a probability that “the product will not perform as many investors anticipate or that it might be sold on the basis of enhanced yield.”

If you believe you have been the victim of stockbroker misconduct, you may wish to consult an attorney to find out more about your legal rights and options. Investors may contact a securities arbitration attorney at Law Office of Christopher J. Gray at (866) 966-9598 or newcases@investorlawyers.net for a no-cost, confidential consultation.