Erez Law is currently investigating Janney Montgomery Scott LLC financial advisor Jack Griffith Jr. (CRD# 1446978) regarding energy sector losses. Griffith has been registered with Janney Montgomery Scott LLC in Columbia, South Carolina since 2014. Previously, he was registered with Ameriprise in Columbia, South Carolina from 2009 until 2014.
Over the past few years, oil prices have significantly declined. 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 values of Linn Energy and Peabody Energy Investments. The volatile energy sector experienced significant turmoil, and many energy companies were negatively impacted when global crude oil prices fell below $40 per barrel at the end of 2015. This was the lowest level since early 2009, as supply was in excess of global demand. Oil and gas companies experienced a spike in bankruptcies, which have left many investors reeling.
It is alleged that Griffith recommended his clients invest in Linn Energy and Peabody Energy Investments.
Linn Energy was an oil and natural gas company headquartered in Houston, Texas. When global crude oil prices dropped, Linn Energy accrued significant debt. According to the company, Linn Energy, LLC filed a voluntary petition for restructuring under Chapter 11 of the Bankruptcy Code in May 2016 to alleviate itself of $6.06 billion in debt. In February 2017, LINN Energy, Inc. was formed as the reorganized successor to Linn Energy, LLC.
Peabody Energy Corp. was the largest U.S. coal producer. In April 2016, the company filed for Chapter 11 bankruptcy protection after a drop in coal prices left the company unable to service its $10.1 billion debt. Peabody emerged from bankruptcy in April 2017, with an estimated net debt of $1.1 billion, down more than $6 billion.
Griffith has been the subject of three customer complaints between 2011 and 2017, one of which was denied, according to his CRD report:
- February 2017. “Client through its attorney alleges that the Financial Advisor recommended unsuitable securities and caused the client’s accounts to be over-concentrated in energy investments.” The customer is seeking $4,265,639 in damages.
- July 2011. “Claimant alleges that his advisor made an unsuitable recommendation that he invest $125,000 in Lehman Brothers bonds in July 2008. After Lehman Brothers declared bankruptcy in September 2008, the bonds were sold, realizing a purported loss of $94,162.” The case was settled for $53,000.
A broker must have reasonable grounds for each recommendation made to investors considering such factors as the customer’s other securities holdings, financial situation, and risk tolerance. In addition, before a firm offers a security to its customers, the firm must conduct due diligence, investigating the facts surrounding the security, to confirm that it is suitable for any customer of the firm. The suitability of an investment for a particular individual is at the center of the investment process and one of the key duties owed by a firm and its broker to the customer. A firm may be held liable for its failure to recommend suitable investments to its customers.
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, Janney Montgomery Scott LLC may be liable for investment or other losses suffered by Griffith’s customers.
Erez Law represents investors in the United States for claims against brokers and brokerage firms for 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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