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A retired investor recovered over $20,000 in February 2017 in a FINRA arbitration involving the sale of Breitburn Energy Partners LP (“Breitburn”).

According to the FINRA award, the retiree alleged unsuitability, failure to supervise and breach of fiduciary duty among other claims.  The award was against Merrill Lynch, Pierce, Fenner & Smith Incorporated (CRD# 7691).

Breitburn is a publicly-traded, independent oil and gas master limited partnership (“MLP”).  Breitburn filed chapter 11 bankruptcy in May 2016 due to low oil prices.  Breitburn is one of many oil and gas companies that have declared bankruptcy in the last two years.

Peabody Energy (OTCPK: BTUUQ) announced on January 26, 2016 that the U.S. Bankruptcy Court for the Eastern District of Missouri approved the company’s reorganization plan, disclosure statement, private placement agreement and backstop agreement.

The bankruptcy court’s approval will allow Peabody to begin soliciting votes from its creditors on the proposed plan of reorganization ahead of March deadline and hearing to confirm the plan.

The bankruptcy court’s approval is another step closer to the final blow for shareholders, who, according to some analysts, probably will end up with cancelled shares and no equity in the reorganized Peabody Energy.  Shareholders have been fighting to get a piece of the reorganized company, even attempting to create an official committee to assist in crafting the reorganization plan.  The bankruptcy court judge denied that request earlier this month.

Our attorneys are investigating losses in Energy XXI Ltd. Bermuda (stock ticker “EXXI”).

According to its website, EXXI is an independent oil and natural gas development and production company that focuses on developing drilling on properties it owns.

EXXI is currently trading at $0.02 per share on the OTC Markets.  The stock reached a peak of close $40 per share at certain points over the past five years, but has dramatically fallen in value with the volatility of oil prices in the past two years.  EXXI lost over 95% of its value in less than a year.

Our attorneys are investigating Bloomfield Hills, Michigan Centaurus Financial, Inc. (CRD# 30833) broker David B. White (CRD# 1382131) over numerous complaints alleging unsuitable recommendations in oil and gas investments such as non-traded REITs, oil and gas programs and limited partnerships.

David B. White’s FINRA BrokerCheck Report

According to White’s FINRA BrokerCheck report, White has eleven (11) disclosures.  Five (5) of the disclosures have come within the last five (5) years.

Our attorneys are investigating investor losses in iPath S&P GSCI Crude Oil Total Return Index ETN (stock ticker “OIL”) and VelocityShares 3x Long Crude Oil ETN (stock ticker “UWTI”).

OIL is a complex exchange-traded note (“ETN”) designed to provide exposure to the S&P GSCI Crude Oil Total Return Index (the “Index”).  According to OIL’s issuer’s website, the ETN is riskier than ordinary unsecured debt securities and have no principal protection.  The investment, according to the website involves significant risk, and investors could potentially lose their principal.

OIL peaked at just over $25.00 per share in the middle of 2014.  Since that peak, it has dropped immensely in value.  It currently trades at or around $6.00 per share.  Barclays Capital is the issuer of OIL.

Since 2014, the value of many oil-, gas- and energy-related securities significantly declined.  Think back to the course of dealing you had with your financial advisor and the firm he or she works(ed) for, and recall how many times he or she may have told you to “stay the course,” “hold on,” “oil prices will recover,” or something similar.  While that may have been some good advice for some investors, it’s not always as easy or simple as it seems.

The “Know Your Customer” Requirement

Financial advisors and their firms are required under the securities laws and regulations to “know their customers.”  This does not simply mean to send you a birthday card, remember your spouse’s name, your golf handicap, or where you like to vacation.  The securities industry rules and regulations require much more from your financial advisor and his/her firm.  Consideration of your age, investment experience, financial situation, investment objectives, tax status, time horizon, and your individual risk tolerance are all required.  All of this is important and for many they change over time based on various factors and changes in life circumstances, requiring changes in investment strategies.

The lawyers at the Silver Law Group, Law Office of David R. Chase and Ciklin Lubitz & O’Connell continue their investigation in Linn Energy, LinnCo, and the brokers and brokerage firms that sold these securities to investors.

Linn Energy and LinnCo are two companies whose investments are structured as master limited partnerships (MLPs).  What was once deemed a promising investment, the two companies have declined drastically.  The master limited partnership (MLP) surpassed $40 per share as recently as late 2012.  Since that time, Linn Energy has dramatically declined and recently declared bankruptcy.

Despite the risky nature of oil, gas, and energy-related securities, many brokers and brokerage firms aggressively sold these investments to their customers, some overconcentrating their customers in the sector.

As of now, it is pure speculation as to what (if any) policies the new administration might offer could serve to impact investor portfolios.  As a recent presidential candidate, Donald Trump has made reference to a market bubble and plenty of commentators have noted that a rise in interest rates could potentially result in a decline in stock values.

During the course of the election night, as a Hillary Clinton loss and a Donald Trump win became closer to reality, the Dow market futures reacted by falling over 600 points.  By early morning Wednesday after election day, the markets not only steadied, but in the first few days following the election the stock market appeared to have a short term rally.

With all of the political commentary in the news, and the stock market reacting the way it did, it was easy to get lost or distracted and many have not noticed that the bond market has been quite volatile.   Longer term bonds have been taking a beating recently.  With predictions of a rising interest rate environment and a possible increase in interest rates by the Federal Reserve, we are likely to see more of the same over the next several weeks.

Silver Law Group, The Law Firm of David R. Chase, and Ciklin, Lubitz & O’Connell have initiated an investigation in unsuitable recommendations and overconcentration in Arch Coal, Inc. (“Arch Coal”).

U.S.-based Arch Coal was the second-largest coal producer in the country as of 2015, with 128 million tons of coal sold in 2015.  Even with that lofty title, plunging oil and energy prices brought the company down.

The company, publicly traded on the New York Stock Exchange at one point but now traded on the OTC Markets, was a hot commodity in trading circles.

Our lawyers are investigating Wedbush Securities Inc. (“Wedbush”) (CRD# 877) broker William “Mark” Heiden (CRD# 2885156) for alleged unsuitable recommendations and overconcentration in various oil and gas investments.

Heiden, based out of Wedbush’s Newport Beach, California office, currently has four disclosures according to his FINRA BrokerCheck report.  According to the report, Heiden’s most recent disclosures are two FINRA arbitration filings, one filed in March 2016 and the other filed in October 2015.  Both are currently pending.

The 2015 FINRA arbitration alleges wrongful, intentional, fraudulent and deceptive activities, including unsuitable and unauthorized trading, falsifying documents, misrepresentation, and omission of material facts.  The FINRA arbitration alleges $1.5 million in damages.  In addition to those allegations, the 2016 FINRA arbitration alleges improper and unauthorized use of margin.  The 2016 FINRA arbitration alleges $200,000 in damages.

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