A report published by the law firm Haynes and Boone on August 1, 2016 found that 90 gas and oil producers in the United States and Canada have filed bankruptcy from January 3, 2015 to August 1, 2016. Over half of the bankruptcies have come in this year alone.
According to the report, the total debt defaulted on by the 90 companies is $66.5 billion. Some of the more notable firms listed in the report are Linn Energy, LLC; Breitburn Operating LP; Sandridge Energy, Inc.; and Atlas Resource Partners, L.P., all of which have filed for bankruptcy in the last three months, many of which were heavily recommended by financial advisors and their respective institutions.
The numerous bankruptcies are the product of oil prices’ dramatic fall from the over-$100 per barrel heaven it occupied for some time. While the prices of the commodity have always been volatile and difficult to determine, the prices have dramatically dropped.
Though many firms implemented strategies to survive long periods of lower prices, known as hedging, the strategies could only work so long. Now that oil prices have remained low and, according to many experts, might continue to drop despite somewhat stabilizing, there is a good chance many other oil and gas companies declare bankruptcy.
The many bankruptcies bring many losses to investors who have probably lost the entirety of their investments in these companies. In addition to the bankruptcies, many companies have simply lost a large percentage of their value due to the low oil prices. For the whose accounts were overconcentrated in oil and gas companies, their losses can be a substantial part of their account.
But for those whose financial advisor, broker, or brokerage firm advised them that this was a safe investment, suitable for conservative investors, or invested a substantial portion of their assets in these companies, you may be able to recover your lost money through FINRA securities arbitration.
Many brokers and brokerage firms got caught up in the façade that was ever-increasing crude oil, improperly recommending master limited partnerships (“MLPs”), bonds, private placements, stocks, and other oil and gas securities to conservative investors based upon the high yields of these investments rather than the risk to principal.
Brokers neglected to conduct due diligence and investigate these investments and negligently recommended them to customers. Others sold investments underwritten by the companies’ investment bankers. Some of the brokerage firms continued to recommend the flailing companies as they dramatically decreased in value, up until it was clear the company was on the verge of bankruptcy.
Despite market trends, there is no excuse to depart from time-tested principles brokers are required to employ with their customers, such as recommending suitable investments for each customer and diversifying their portfolios.
Become informed about your rights, explore whether you have a claim and see if we can be of assistance in trying to recover your investment losses. Cases are taken on a contingency fee basis, meaning no attorney’s fee is owed if there is no recovery. Our lawyers have collectively represented hundreds of investors in FINRA or securities arbitration claims and recovered millions of dollars from large and regional brokerage firms.
For more information about the Law Firms, the lawyers, and the oil and gas investment practice area, please visit the oil and gas investment website at: www.oilgasfinraarbitration.com. You can also contact toll-free Scott Silver at: (800) 975-4345 for a confidential, no-cost consultation on the potential for recovery of your investment losses. Our attorneys represent clients nationwide in securities cases to recover investment losses. There is no fee unless we obtain a recovery for you.