One of the biggest trends in investing over the past 5-10 years has been to make investments in oil and gas energy stocks and master liability partnerships, as these types of investment vehicles were consistently producing high yields, and thus income, to investors. And for a time, these investments seems like a secure deal. The demand for energy has been growing, and oil and gas prices have consistently been high, so it seemed like investors couldn’t lose. Due to the apparent stability of the oil and gas industry, many financial advisors and brokers have pushed oil and gas energy stocks, even to clients with moderate and low risk tolerances. However, this view of the oil and gas industry fails to take into consideration that the success of these investments is dependent upon oil’s high price.
But the truth about oil and gas energy stocks is that the energy market can be very volatile, and investments in energy exploration and production are often speculative and high risk. Oil prices can drastically change overnight, and the fluctuations are unpredictable. Due to the volatile and risky nature of oil and gas energy stocks, they may be unsuitable for consecrate and moderate investors.
Legal Recourse Options For Investor Losses From Oil & Gas Stocks
Investors that were unscrupulously taken advantage of and encouraged to invest in oil and gas energy stocks by their broker or financial advisor may have legal recourse against them, and/or their employers, in the event that the investor sustained losses due. Investors can bring the following legal actions, as appropriate, against the broker or advisor who encouraged investment in risky oil and gas stocks:
- An Unsuitability Action. An unsuitability action, which is also sometimes referred to as an unsuitable investment recommendation action, is a legal action against a broker or advisor that is similar to a malpractice action. It is brought against the person who encouraged an investor to purchase the oil and gas stocks and alleges that the broker was negligent in advising the investor, and that the broker provided unsuitable investment recommendations in oil and gas stocks that were incongruent with the investor’s investment strategy and appetite for risk. Oil and gas energy stock losses may be recoverable either by filing a lawsuit, or by filing a claim for arbitration before the Financial Industry Regulatory Authorities (FINRA).
- A Fraud Action. If an investor has been the victim of fraud, either through deceitful or dishonest sales practices of the broker or advisor, or by falling prey to an oil and gas scam, the victim investor may be able to recover losses through a fraud action. Generally, fraud occurred if a broker knowingly made false representations of material fact to an investor to induce the investor to purchase certain stocks, and the investor relied upon the deception to his or her detriment when making the stock purchase. This most commonly takes the form of a broker making a stock purchase recommendation, without disclosing the risks involved with making the investment.