Chicago-based Stoltmann Law Offices has represented investors who’ve suffered losses from dealing with RBC brokers who have oversold energy stocks and other energy-related investments. Although these days energy stocks are among the worst investments to own – the pandemic and oil & gas glut have severely depressed demand — prior to this year brokers had been aggressively pitching petroleum-producing companies. Brokers who aggressively sold energy stocks knew how volatile the energy sector has become, yet filled investors’ portfolios with oil and gas issues. Thousands of investors have legitimate claims against their advisors for overselling unsuitable investments.
Companies that once were opening drilling operations at a breakneck pace are facing bankruptcy as the slump in the industry worsens. Investors who bought individual energy stocks, exchange-traded or mutual funds are feeling the pain.Most recently, investors filed claims against RBC brokers Joseph Ijong Chu and Christopher Lawrence Phillips, who worked at the firm’s Stamford, Connecticut, office. The brokers face investor claims of more than $2 million for reportedly selling “unsuitable investments in oil-producing and industrial metals & materials stocks leading to an over-concentration in those sectors.”
One claim against Chu alleges the broker sold $1.6 million in energy investments to a client between Sept. 18, 2018, through Jan. 20, 2020. The complaint states that the stocks not only declined in value, but were “outside their [customers’] investment objectives.” A separate, $500,000 claim against Chu, filed in July, 2020, alleged he “misrepresented the risk of allocation in energy and material sectors investments and over concentrated the Claimant’s accounts in highly volatile investments.”
In plain English, the brokers ignored their clients’ requests for lower-risk investments. Securities industry regulators such as FINRA have long been concerned about broker-advisors who load clients’ portfolios up in volatile investments and have written new rules to protect investors. Complaints to FINRA about risky energy investments have been surging for the past four years as demand for fossil fuels declined in most of the industrialized world, which has led to a glut of oil and gas. Those investors who had been overconcentrated in energy stocks have increasingly filed arbitration claims against their brokerage firms, which often fail to supervise their brokers.
Earlier this year, FINRA censured and fined Wells Fargo Clearing Services $350,000 for placing “more than 50% of customers liquid net worth tied up in energy-sector securities. Seventy of their customers lost a total of more than $10 million when prices of energy securities plummeted in 2014 and 2015.”
Have you invested with brokers who have sold you inappropriate energy stocks that ignore your risk tolerance? FINRA and the SEC have strict rules on disclosing risk profiles on all investments sold by brokers and investment advisers. If they fail to fully inform you of downside risk, you may have a case in arbitration. Firms are also legally required by FINRA to monitor and supervise what their brokers are selling – their investments must be vetted and authorized by the firms – and have an obligation to investors to fully reveal true risk and return information about the vehicles sold. Investors can file FINRA arbitration complaints if these rules are broken.
If you invested with a broker-advisor and lost money as a result, you may have a claim to pursue through FINRA Arbitration. Please contact Stoltmann Law Offices, P.C. at 312-332-4200 for a free, no obligation consultation with a securities attorney. Stoltmann Law Offices is a contingency fee law firm, which means we do not get paid until you do!