Did You Suffer Investment Losses in the Oil, Gas, and Energy Sector with Your David Lerner Associates, Inc. Broker?

David Lerner Associates

Erez Law is currently investigating David Lerner Associates, Inc. brokers who recommended their clients invest in unsuitable oil, gas, and energy investments, which suffered significant declines when the market crashed due to the COVID-19 pandemic (the winter and spring of 2020). If yo have suffered losses. please contact us to discuss your case. You may be entitled to legal compensation.

In May 2020, two months into the global pandemic, oil prices continued to drop to the low $20s per barrel as demand for oil has dwindled due to worldwide lockdowns. Predictions are surfacing that many oil companies will be declaring bankruptcy soon.

The Exploration & Production (E&P) Industry, including oil companies, had $2.47 trillion in revenues in 2019. In 2020, the industry is predicting to see $1.47 trillion in revenue, a 40% decline from the previous year, according to CNBC. For example on May 9, 2020, West Texas Intermediate (WTI Crude) prices were at $23.26 per barrel, which is a 59% decline from a year earlier. Brent Crude dropped to $31 per barrel during this same period; Brent Crude saw a low of $19.33 on April 21, 2020, compared to $70.23 on May 13, 2019, which is a 70% decrease.

As of May 2020, the energy sector has become the second-largest group in the S&P Index, representing just 3% of the index, compared to 15% 10 years ago and 30% back in 1980.

It is alleged that David Lerner Associates, Inc. brokers recommended their clients invest in non-public limited partnerships, including Energy Eleven (Energy 11), LP and Energy Resources 12, as well as the Spirit of America Energy (SOAEX) mutual fund, many of which were not suitable for many investors.

Energy 11, LP is a public non-traded limited partnership that was formed to acquire and develop oil and natural gas properties throughout the United States. Energy 11, LP has raised more than $350 million and has invested the proceeds in non-operated working interests in approximately 221 existing producing wells and approximately 247 future development locations in the Sanish field located in Mountrail County, North Dakota, according to its website. Energy 11, LP is not publicly traded and has limited liquidity.

The Spirit of America Energy (SOAEX) is a family of mutual funds created exclusively for clients of David Lerner Associates, Inc., and it is comprised of six funds including Real Estate Investment Trusts (REITs) (SOAAX), Income Fund (SOAIX), Municipal Tax Free Bond (SOAMX), Income and Opportunity Fund (SOAOX), Value Fund (SOAVX), and the Energy Fund (SOAEX). According to its website, the fund “seeks to achieve its investment objective by investing at least 80% of its assets in energy and energy-related companies,” according to its website, including Master Limited Partnerships (MLPs), exploration, production, and transmission of energy or energy fuels. According to its site, “Principal Risks of Investing in the Energy Fund: An investment in the Energy Fund could lose money over short or long periods of time. You should expect and be able to bear the risk that the Energy Fund’s share price may fluctuate within a wide range. There is no assurance that the Energy Fund will achieve its investment objective.”

Energy Resources 12 is not publicly traded and has limited liquidity. According to its prospectus, Energy Resources 12 planned to “acquire working and other interests in producing and non-producing oil and natural gas properties in the United States and utilize third-party operators to manage the day-to-day operations. Our primary purposes are to generate revenue from the production and sale of oil and gas from the properties we acquire, participate in drilling and other exploration and development activities initiated by the operators of such properties, and distribute cash to our partners. We do not intend to apply to list the common units for trading on any securities exchange or on the over-the-counter market, except for in connection with a liquidity event.” Energy Resources 12 identified its risk factors on its prospectus being illiquidity, conflicts of interest with the general partner, management’s limited operating experience in the oil and gas industry, as well as no guarantee of any return on your investment or the amount or timing of distributions, among others.

Pursuant to FINRA Rules, member firms are responsible for supervising a broker’s activities during the time the broker is registered with the firm. Therefore, David Lerner Associates, Inc. may be liable for investment or other losses suffered by its customers.

Erez Law represents investors in the United States for claims against brokers and brokerage firms for recommending unsuitable investments and wrongdoing. If and have experienced investment losses, please call us at 888-840-1571 or complete our contact form for a free consultation. Erez Law is a nationally recognized law firm representing individuals, trusts, corporations and institutions in claims against brokerage firms, banks and insurance companies on a contingency fee basis.

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Author: Jeffrey Erez

The founder of Erez Law, Jeffrey Erez, focuses exclusively on securities arbitration and litigation. Mr. Erez passionately believes in representing aggrieved investors and obtaining justice for his clients through litigation.