In September 2017, a former client of J.J.B. Hilliard, W.L. Lyons, LLC won an award in a FINRA arbitration for compensatory damages for $450,000 and $94,150 in punitive damages and $18,399 in costs for losses sustained from over the concentration of a customer’s accounts in stocks of Breitburn Energy Partners, an independent oil and gas master limited partnership focused on the development and production of oil and gas properties throughout the United States.
Breitburn Energy and other oil and gas companies have experienced price fluctuations over the past few years, which has put financial stress on the oil and gas industry. A supply glut in 2014 and 2015 led to some of the lowest prices the market has seen in recent years. In turn, securities values also dropped, including the value of Breitburn Energy. While financial advisers can effectively coax clients into lucrative high risk, high yield investments in the oil and gas industry, some fail to fully inform their clients of the inherent risks. Breitburn has since filed for Chapter 11 of the U.S. Bankruptcy Code to restructure its balance sheet in May 2016, according to a statement on the company’s website.
According to the award, the customers sold all of their blue chip stocks and invested all of the funds in the highly speculative oil and gas company, Breitburn Energy Partners Limited Partnership. The clients asserted that the lack of diversification of their portfolio exposed them to massive risk, which was contrary to their conservative investment objectives and low risk tolerance level.
The causes of action included violation of Illinois’ Securities Act, §§ 815 ILCS 5/12 et al.; breach of fiduciary duty; negligence/negligent misrepresentation and omission; breach of contract; restitution; common law fraud; and negligent supervision. The FINRA arbitration hearing was conducted in St. Louis, Missouri.
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, J.J.B. Hilliard, W.L. Lyons, LLC may be liable for investment or other losses suffered by its customers.
Erez Law represents investors in the United States for claims against J.J.B. Hilliard, W.L. Lyons, LLC financial advisors for losses sustained from over the concentration of a customer’s accounts in Breitburn Energy Partners stock in 2015. If you were a client of J.J.B. Hilliard, W.L. Lyons, LLC or another firm, 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.