Erez Law is currently investigating former UBS Financial Services Inc. financial advisor William Paynter Jr. (CRD# 2835535) regarding unsuitable and overconcentrated investments in the high risk oil and gas sector. Paynter has been registered with Wells Fargo Clearing Services, LLC in Scottsdale, Arizona since April 2017. Previously, Paynter was registered with UBS Financial Services Inc. in Scottsdale, Arizona from 2014 to 2017, and with Morgan Stanley in Scottsdale, Arizona from 2011 to 2014.
It has been reported that recently, an elderly couple and former client of Paynter filed a $500,000 FINRA arbitration against Paynter alleging unsuitable investments and overconcentration in the high risk oil and gas sector, despite their investment objectives being to preserve their principal and generate a modest income to sustain themselves throughout their retirement. According to the complaint, Paynter did not ensure that a stop loss was in place and the clients have lost the majority of their principal. It is alleged that Paynter recommended investments in Savient Pharmaceuticals as well as the following oil and gas companies are:
- Atlas Resource Partners
- Chesapeake Energy
- Diamond Offshore Drilling
- Linn Energy, LLC
- Memorial Production Partners
- Targa Resources
- Total S.A.
- Vanguard Natural Resources
These 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. 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.
Atlas Resource Partners, L.P. was an exploration and production company. Atlas Resources Partners filed for bankruptcy in July 2016 and executed a restructuring plan that it has said will cut debt by about $900 million, reduce interest expense by $80 million, and to alleviate itself of $1.36 billion in debt. Atlas Resource Partners emerged from bankruptcy protection in September 2016 protection with a new name, Titan Energy LLC.
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.
Memorial Production Partners LP focuses on the acquisition, production and development of oil and gas properties in the United States. In January 2017, company eliminated $1.3 billion in debt by filing for reorganization under Chapter 11 of the United States Bankruptcy Code, according to a release on their website.
Seadrill was once valued at $23.7 billion but with the decline in oil prices, the company is now worth about $398 million with liabilities that exceed its current assets by nearly double. As of April 2017, Seadrill is on the brink of bankruptcy and in the process of a restructuring plan.
The distribution value of Vanguard Natural Resources kept steady in 2013 at $2.47 and then $2.52 in 2014, however it took a nosedive in 2015 dropping to just $1.24, according to the company website. In 2016, the value was at $.09 and as of March 2017 it currently sits at $.08. As of February 2017, Vanguard Natural Resources filed for relief under Chapter 11 of the U.S. Bankruptcy Code, and has entered into a restructuring agreement, according to a statement on their website.
Paynter has been the subject of one additional customer complaint, according to his CRD report:
June 2017. “Claimants alleged, inter alia, unsuitability with respect to investments – 2013 to 2014.” The customer is seeking $500,000 in damages and the case is currently pending.
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 fiduciary 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, UBS Financial Services Inc. may be liable for investment or other losses suffered by Paynter’s customers.
Erez Law represents investors in the United States for claims against former UBS Financial Services Inc. financial advisor William Paynter Jr., regarding unsuitable and overconcentrated investments in the high risk oil and gas sector. If you were a client of UBS Financial Services Inc. 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.