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Did You Lose Money Investing in the High-Risk Energy Sector with Merrill Lynch, Pierce, Fenner & Smith Financial Advisor Charles Friedlander?

Posted on Friday, December 22nd, 2017 at 10:19 am    

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Erez Law is currently investigating Merrill Lynch, Pierce, Fenner & Smith financial advisor Charles Friedlander (CRD# 1766198) regarding devastating losses from unsuitable investments in the high-risk energy sector. Friedlander has been registered with Merrill Lynch, Pierce, Fenner & Smith in Garden City, New York since 2013. Previously, he was registered with Morgan Stanley in Garden City, New York from 2009 to 2013.

It has been reported that in December 2017, former clients of Friedlander, a retired couple from Florida, filed a FINRA arbitration against Friedlander alleging that he pushed oil and gas investments and Master Limited Partnerships (MLPs), causing the couple to lose $350,000 of irreplaceable retirement savings. It is alleged that the couple was looking to generate a stable income stream to preserve their capital, produce income, and sustain themselves throughout retirement years. It is alleged that Friedlander described the energy sector investments as safe and secure investments. According to the complaint, Friedlander concentrated 70% of the couple’s portfolio in the high risk energy sector, without a hedging strategy or downside protection. Additionally, the couple alleges that even after they confronted Friedlander about devastating losses in their investments, Friedlander advised them to continue to invest more in the high risk sector.

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. 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.

According to the complaint, Friedlander recommended the couple invest in the following energy sector investments, among others:

  • Breitburn Energy Partners
  • Seadrill
  • Buckeye Partners
  • Enbridge Energy
  • Energy Transfer Partners
  • Enterprise Products Partners

Breitburn Energy Partners is an independent oil and gas master limited partnership focused on the development and production of oil and gas properties throughout the United States. The decline in commodity prices beginning in 2014 placed stress on the industry as a whole, and the company’s debt burden became unsustainable. Breitburn has since filed for Chapter 11 of the U.S. Bankruptcy Code to restructure its balance sheet in May 2016 and eliminated $5.8 billion in debt.

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 was on the brink of bankruptcy and in the process of a restructuring plan, and the company commenced Chapter 11 bankruptcy as of September 12, 2017 and is in the process of restructuring. As of June 2017, Seadrill traded on the New York Stock Exchange (NYSE) for $0.45. As of December 19, 2017, Seadrill traded on the NYSE for $.025.

Friedlander was the subject of one additional customer complaint in 2007 that was denied, alleging investments were not in line with investment objective of securities that would yield safe, modest returns, according to his CRD report.

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, Merrill Lynch, Pierce, Fenner & Smith may be liable for investment or other losses suffered by Friedlander’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.