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Published on: May 3, 2018

Griffin Capital Essential Asset REIT Investors May Have Substantial Losses Based On Recent Tender Offer For $6.89/Share

Building Demolished Investors in Griffin Capital Essential Asset REIT, Inc. (“Griffin Essential”), may have substantial losses based on a tender offer to purchase shares for $6.89 a share — or $3.11 a share less than the offering price of $10 a share. As recently reported, on December 1, 2017, third-party real estate investment firm MacKenzie Capital Management (“MacKenzie”) made an unsolicited tender offer for shares of Griffin Essential at $6.89 per share, in cash. The Board of Directors of Griffin Essential has recommended that its shareholders reject the offer. However, the Board also advised that, as of September 30, 2017, its share redemption program (“SRP”) for 2017 was fully subscribed, thus leaving investors seeking liquidity via redemption with little recourse.

Griffin Essential is a Maryland REIT incorporated in August 2008 for purposes of acquiring a portfolio of geographically diverse single tenant properties across a wide range of industries. From 2009 – 2014, Griffin Essential conducted a series of offerings in connection with its capital raise. In aggregate, the non-traded REIT issued 126,592,885 shares of common stock for gross proceeds of approximately $1.3 billion. As a publicly registered non-traded REIT, Griffin Essential was permitted to sell securities to the investing public at large, including numerous unsophisticated retail investors who bought shares through the IPO upon the recommendation of a broker or money manager.

Investors who purchased shares of Griffin Essential through the offering acquired their shares for approximately $10 per share. Therefore, it would appear that investors who participated in the MacKenzie tender offer incurred substantial losses on their initial investment in excess of 30% (exclusive of commissions and distributions).

Published on: April 25, 2018

Hard Rock Exploration Oil and Gas Private Placements Impacted By Bankruptcy Filing

by InvestorLawyers

Oil Drilling Rigs Hard Rock Exploration, Inc. (“Hard Rock”) of Charleston, West Virginia and certain of its affiliate entities, including Blue Jacket Gathering LLC, Blue Jacket Partnership, Caraline Energy Company, and Brothers Realty, LLC (“Hard Rock Affiliates”), are independent oil and gas development companies.

On September 5, 2017, Hard Rock and Hard Rock Affiliates filed for bankruptcy protection in the Southern District of West Virginia Bankruptcy Court (2:17-bk-20459). Shortly after filing for Chapter 11 bankruptcy, Hard Rock reported a monthly cash flow shortage of $325,000. According to Hard Rock’s lender, Huntington National Bank, “rehabilitation of the Debtors’ business is impossible” due to their ongoing hemorrhaging of cash.

Hard Rock and Hard Rock Affiliates operate approximately 390 well sites in the Appalachian Basin. In addition, Caraline Energy Co. owns and maintains approximately 365 miles of pipeline developed to support natural gas collection.

Published on: April 20, 2018

Vista Drilling Programs Investors Solicited by Brokers May Have Arbitration Claims

by InvestorLawyers

Oil Drilling Rigs Investors in various oil drilling programs offered by Vista Resources, Inc. (“Vista”), may be able to recover losses sustained on their investment through arbitration before FINRA, in the event that the investment was recommended by a financial advisor who lacked a reasonable basis for the recommendation, or if the nature of the investment — including its risk components — was misrepresented by the advisor and his or her brokerage firm. Founded in 1987, Vista is headquartered in Pittsburgh, PA. Over the course of the past several decades, Vista has managed roughly 60 drilling programs, typically structured as industry joint ventures or limited partnerships.

Included among Vista’s recent programs are: Vista Drilling Program 2011-1, Vista Drilling Program 2012, and Vista Drilling Program 2013-2 (collectively, “Vista Programs”). These Vista Programs are extremely complex and risky investment vehicles, for a number of reasons. To begin, these private oil and gas investments charge very high fees to investors. For example, Vista charges investors an approximate 10% up-front commission. In addition, Vista charges an approximate 12% markup fee on the costs associated with drilling for productive oil reserves. Such high up-front commissions and fees act as an immediate “drag” on the initial investment, and present significant risk to the uninformed retail investor.

Further, these Vista Programs are allowed to use up to 20% of investor capital to drill speculative exploratory wells. A broker recommending such an investment has a duty to inform the investor of such risks, and of the capital-intensive and speculative nature of oil drilling as an investment. Moreover, the brokerage firm — and by extension, the broker — recommending such an investment, have a duty to first conduct due diligence on the investment.

Published on: April 18, 2018

Scott William Palmer, Former Janney Montgomery Scott Broker, Barred by FINRA

by InvestorLawyers

stock market chart Former financial advisor Scott William Palmer (CRD# 817586), who was most recently affiliated with Janney Montgomery Scott LLC (“Janney”) (BD# 463), has voluntarily consented to a bar from the securities industry pursuant to a Letter of Acceptance, Waiver & Consent (“AWC”) accepted by FINRA Enforcement on April 10, 2018. Without admitting or denying any wrongdoing, the Hackensack, NJ-based former broker consented to the industry bar following his June 13, 2017 termination from employment by Janney.

Mr. Palmer’s career in the securities industry dates back to 1973, and included stints at now defunct Darby & Co., Dean Witter, Citigroup, and — most recently, Janney — from 2007-2017. In June 2017, Janney permitted Mr. Palmer to resign; according to publicly available information and as disclosed on Mr. Palmer’s Form U-5, his discharge from employment was due to Janney’s “Loss of confidence related to complaint disclosure history.”

FINRA records indicate that Mr. Palmer has been subject to twelve customer disputes, including one case in which relief was denied, and another case that settled in July 2016 for $75,000 alleging that Mr. Palmer had made unsuitable investments in the customer’s account. According to FINRA BrokerCheck, of the ten customer complaints pending arbitration, a number of them allege that Mr. Palmer purportedly recommended unsuitable investments in certain energy stocks, and further, overconcentrated certain customers in energy sector investments.

Published on: April 11, 2018

EV Energy Partners Declares Bankruptcy – Investors May Have Claims

by InvestorLawyers

Oil Drilling Rigs On April 2, 2018, EV Energy Partners, L.P. (“EVEP”) filed for Chapter 11 bankruptcy in the District of Delaware (Case No. 18-10814 (CIS)). While EVEP continues to operate its business, it now seeks to implement a prepackaged plan of reorganization, under which equity investors who purchased EVEP Units will likely sustain significant losses.

Investors who bought into EVEP upon a recommendation by their broker or financial advisor may be able to recover their losses in FINRA arbitration, in the event the recommendation to invest lacked a reasonable basis, or if the investment was solicited through a misleading sales presentation. EVEP is a publicly traded master limited partnership (“MLP”) specializing in the acquisition and operation and development of onshore oil and gas properties in the continental United States. EVEP’s holdings include oil and gas properties in the Barnett Shale, the San Juan Basin, the Appalachian Basin, as well as the Permian Basin.

As most recently reported, under the currently proposed plan of reorganization, EVEP Unitholders will receive 5% of the new entity (post-bankruptcy), with 5-year warrants to buy up to 8% of the reorganized company’s new equity.

Published on: April 4, 2018

Benefit Street Partners Realty Trust Net Asset Value Reported As $19.17/Share: Sale Options Limited

by InvestorLawyers

Apartment Building Investors in Benefit Street Partners Realty Trust, Inc. (“Benefit Street” or the “Company”) may have arbitration claims to be pursued before the Financial Industry Regulatory Authority (“FINRA”), 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 financial advisor. Benefit Street was formerly known as Realty Finance Trust; however, in September 2016, Realty Finance appointed Benefit Street Partners (“BSP”) as its new advisor, replacing former sponsor AR Global Investments.

Benefit Street is a publicly registered, non-traded real estate investment trust (“REIT”) that originates, acquires and manages a diversified portfolio of commercial real estate debt secured by properties located in the United States. Benefit Street is managed by BSP, a credit-focused alternative asset manager with over $20 billion of assets under management. Benefit Street commenced its operations in November 2012, and raised $786 millions in investor equity prior to closing its offering in January 2016. As of September 2016, the Company’s portfolio consisted of 73 loans and 7 CMBS investments.

In the years following the 2008 financial crisis, many retail investors were steered into investing in non-traded REITs such as Benefit Street by their broker or money manager based on the investment’s income-producing potential, in addition to the investment’s purported negative correlation to market volatility. Unfortunately, however, many investors were not informed of the complexities and risks associated with non-traded REITs, including the investment’s high fees (as high as 15% of the initial capital investment in some instances) and illiquid nature.

Published on: April 3, 2018

Triloma EIG Energy Income Fund Authorizes Plan of Liquidation and Dissolution

by InvestorLawyers

Investors in the Triloma EIG Energy Income Fund (the “Triloma Perpetual Fund”) and the Triloma EIG Energy Income Fund – Term I (the “Triloma Term Fund”) (collectively, the “Triloma Funds”) may be able to recover their investment losses through FINRA arbitration, in the event that the 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 financial advisor. The Triloma Funds are publicly registered, unlisted closed-end management investment companies under the Investment Company Act of 1940 (’40 Act) that focus on investing in privately originated energy company and energy project debt. The Triloma Funds are managed by Triloma Energy Advisors and EIG Credit Management Company.

On March 26, 2018, the Board of Trustees of the Funds approved a plan of liquidation of each respective fund, authorizing the liquidation and dissolution of the Triloma Funds. Pursuant to the liquidation plan, the Triloma Funds will not engage in any further business activities, except for the purpose of winding down operations and business affairs. Further, in accordance with the plan of liquidation, the Boards agreed to terminate each funds’ respective distribution reinvestment plan and previously approved monthly distributions.

Under the plan of liquidation, the Triloma Funds have agreed to sell their originated investments to a third-party and will use a portion of the proceeds to pay all of their outstanding debts, claims and obligations. Triloma Funds’ shareholders can expect to receive an initial cash liquidating distribution on or about May 15, 2018. To the extent that any assets might remain after such liquidation payments and satisfaction of final expenses, there will be a second liquidating distribution above a threshold of $100 per shareholder made on or before June 30, 2018.

Published on: March 26, 2018

The Parking REIT, Inc. Announces Immediate Suspension of Cash Distributions

by InvestorLawyers

Money in Wastebasket As recently reported, the Board of Directors of The Parking REIT, Inc. have unanimously authorized a suspension of the company’s cash distributions and stock dividends, effective immediately. In conjunction with filing a Form 8-K with the SEC on March 23, 2018, the company issued a press release indicating, inter alia, that “The Board is focused on preserving capital in order to maintain sufficient liquidity to continue to operate the business and maintain compliance with debt covenants, including minimum liquidity covenants…”

Headquartered in Las Vegas, NV, The Parking REIT (f/k/a MVP REIT II, Inc.) holds a real estate investment portfolio consisting of 44 parking facilities across 15 states, with an estimated aggregate asset value of $280 million. As a publicly registered non-traded REIT, The Parking REIT is a particularly complex and risky investment vehicle. Among the risks associated with non-traded REITs are their characteristically high up-front fees and commissions (as high as 15% in some instances), as well their illiquid nature.

Unlike exchange traded REITs, non-traded REITs do not trade on a national securities exchange, and therefore cannot be readily sold and resold on a liquid exchange. Further, as is the case with The Parking REIT, investors may unfortunately encounter a scenario where the Board elects to reduce or altogether suspend distributions and/or dividends. For many investors in non-traded REITs, one of their primary reasons for investing in the first instance has to do with the enhanced yield often associated with non-traded REITs. However, when the prospect of steady income through distributions disappears, the investor is left with an illiquid investment position that cannot be easily or readily exited.

Published on: March 22, 2018

Former Morgan Stanley Broker Thomas Alan Meier Barred in Connection with Customer Complaints

by InvestorLawyers

Money Maze Former financial advisor Thomas Alan Meier (CRD# 1146044), who was most recently affiliated with Morgan Stanley (CRD# 149777), has voluntarily consented to a bar from the securities industry pursuant to a Letter of Acceptance, Waiver & Consent (“AWC”) accepted by FINRA Enforcement on March 19, 2018. Without admitting or denying any wrongdoing, the Miami, FL based broker consented to the industry bar following FINRA’s investigation and findings concerning allegations of, inter alia, unauthorized trading, unsuitable investments, and overconcentration in energy sector investments.

Mr. Meier’s career in the securities industry dates back to the early 1980’s, including stints at Merrill Lynch, now defunct Thomson McKinnon, Prudential Securities, Citigroup — and most recently, Morgan Stanley — from June 2009 – April 2016. According to a previously filed Form U5 notice, Mr. Meier resigned from Morgan Stanley in 2016 while “under internal review.”

Pursuant to the AWC, FINRA Enforcement alleged that between July 2012 and March 2016, Mr. Meier made nearly 1,300 stock trades in six customer accounts without permission, yielding Mr. Meier commissions of about $265,000. Further, FINRA has alleged that these trades cost customers approximately $818,000, as well as more than $2 million in unrealized paper losses.

Published on: March 13, 2018

FINRA Bars Former Gold Coast Securities Broker in Connection with Allegations of Excessive Trading

by InvestorLawyers

Piggy Bank in a Cage Financial advisor Joseph C. Farah (CRD# 2978633), who was most recently affiliated with Gold Coast Securities, Inc. (CRD# 110925) (hereinafter, Gold Coast), has voluntarily consented to a bar from the securities industry pursuant to an Order Accepting Offer of Settlement (hereinafter, the Settlement) entered into on or about January 25, 2018. Without admitting or denying any wrongdoing, Mr. Farah consented to the industry bar following FINRA Enforcement’s investigation into certain allegations including, inter alia, that Mr. Farah purportedly engaged in excessive trading in a customer’s account, and further, allegedly failed to inform his employer, Gold Coast, that the customer had opened a brokerage account at another broker-dealer at Mr. Farah’s behest.

Beginning in 1998, Mr. Farah began working as a registered representative for Financial Network Investment Corporation in El Segundo, CA. Subsequently, he worked at National Planning Corporation (CRD# 29604) from July 1998 – September 2002. From September 2002 until September 2015, Mr. Farah was affiliated with Gold Coast as a registered representative. In September 2015, Mr. Farah was discharged from his employment with Gold Coast. According to publicly available information, this termination was due, in part, to allegations raised by FINRA that “[t]he representative had discretionary authority over a customer’s account at another broker-dealer without notifying the firm of his affiliation….”

As alleged in the Settlement, in October 2012 Mr. Farah opened a Gold Coast brokerage account on behalf of a self-employed artist – identified by the initials ‘LN’. At around the same time, Mr. Farah allegedly suggested that LN also open a brokerage account with TD Ameritrade. According to FINRA, Mr. Farah allegedly “promised to reimburse LN for any losses in her TD Ameritrade account that exceeded five percent and, in exchange, would take 30 percent of the trading profits as compensation.”