Investor Recovery Options for Losses in Oil and Gas MLP Funds

Stoltmann Law Offices has brought arbitration claims against dozens of brokerage firms like Ameriprise Financial, Merrill Lynch, Morgan Stanley, Wells Fargo, and JP Morgan Securities involving the unsuitable recommendations for investors to invest in oil and gas related securities.  In 2014 and 2015, we represented dozens of investors against various firms involving Master Limited Partnerships, or MLPs, which are almost always related to the oil and gas industry.  Then, during a big drop in the price of oil, a lot of oil and gas companies went into bankruptcy, dragging a lot of investor money with them.  History is repeating itself.

The price of oil has completely tanked in the last month. Even before the COVID-19 pandemic, the price of oil was being pressured by a price war involving Saudi Arabia, Russia, and OPEC.  Combined with the broad-based ongoing market crash, oil and gas investments – which are inextricably linked to the price of oil – have suffered catastrophic losses.  There are some well-know names on this list:

Goldman Sachs MLP and Energy Renaissance Fund – GER: Year to Date has dropped from 4.37 to 0.68 per share

Goldman Sachs MLP Income Opportunities Fund – GMZ: Year to Date has dropped from 6.22 to 0.829 per share

Nuveen All-Cap Energy MLP Opportunities Fund – JMLP: Year to Date has dropped from 5.37 to 0.68 per share

Duff & Phelps Select MLP and Midstream Energy Fund – DSE: Year to Date has dropped from 3.90 to 0.35 per share

Clearbridge Energy Midstream Opportunities Fund – EMO: Year to Date has dropped from 8.53 to 0.71 per share

Kayne Anderson Midstream Energy Fund – KMF: Year to Date has dropped from 10.68 to 1.42 per share

These are not private placements or small one-off oil drilling operations. These are substantial, large, funds which had billions of investor dollars and they’ve lost upwards of 90% in 2020. The problem with these funds invariably is 1) their concentration in a historically volatile sector (oil/energy); and 2) their use of leverage. Where investors get into trouble is when their brokers and financial advisors recommend too much money be invested in any single fund or, in many instances, advisors fall in love with a sector and over-concentrate their clients’ portfolios in several offerings linked to the same sector. Further, the dividend yield on these MLP Funds has always been high. However, with those higher yields comes substantially more risk –  a fundamental material fact usually ignored by brokers when they made their sales pitch to clients.

If you invested in oil and gas related investments 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!

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