Erez Law is currently investigating recommendations from brokerage firms across the country who recommended overconcentrated investments in Breitburn Energy Partners LP, 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.
In one example of broker misconduct, a former Louisville, Kentucky-based J.J.B. Hilliard, W.L. Lyons, LLC (CRD# 453) customer alleges that from 2012 to 2014 a broker at the brokerage firm recommended a large, concentrated portfolio in Breitburn Energy, despite the retired customer’s desire to main a conservative portfolio that preserves capital and generates income to sustain throughout retirement. The Hilliard Lyons customer repeatedly voiced concerns over Breitburn Energy’s declining value and economic trouble, but the broker reassured them and told them to hold their investments or even to buy more stock in some instances. Neither the broker nor anyone from Hilliard Lyons attempted to diversify the customer’s account to protect his irreplaceable retirement savings, and no stop-loss strategy was implemented to protect the customer’s investments. Due to these unsuitable investments, the Hilliard Lyons customer lost close to $60,000 that was invested with Breitburn Energy.
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, J.J.B. Hilliard, W.L. Lyons, LLC and other brokerage firms may be liable for investment or other losses suffered due to its registered representatives.
Erez Law represents investors in the United States for claims against brokerage firms such as J.J.B. Hilliard, W.L. Lyons, LLC and many others regarding overconcentration in Breitburn Energy. 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.