Eccleston Law Offices, P.C. represents individual and institutional investors in litigation and arbitration proceedings to recover their investment losses caused by unsuitable investment recommendations, breach of fiduciary duty, negligence or other misconduct. We have extensive experience representing investors in arbitration and litigation disputes with securities broker-dealers and investment advisory firms, and have recovered tens of millions of dollars for investors.
Our attorneys are representing investors who have suffered losses in various oil and gas deals or energy limited partnerships recommened by stockbrokers or other financial advisors. If you have suffered losses investing in an oil and gas deal or energy limited partnership, your losses may be recoverable through securities arbitration.
Oil and Gas Deals May Be Risky for Retail Investors
In an oil and gas deal or drilling limited partnership, an oil or gas company sells partnership units to investors and uses the money it raises to lease property and drill wells. In return for managing the project, the sponsor company can take an upfront fee that averages about 15-16% of one’s investment (commonly referred to as tangible and intangible drilling costs) and a percentage of any revenue generated. In return, the promoter offers the investor the prospect of a substantial first year tax write-off and quarterly cash distributions from the sale of any oil or gas the partnership finds until the wells run dry.
Oil and gas deals or drilling limited partnerships are typically sold through a private placement securities offering. A “private placement” is an offering of securities that is not sold through an initial public offering, but rather one that is sold privately through pre-existing relationships. Although these securities are subject to the Securities Act of 1933, they do not have to be registered with the SEC and therefore do not pass the same level of scrutiny as a public offering of securities. Instead, companies rely on a set of rules known as Regulation D, which provide companies raising capital with an exemption from registration with the SEC. Companies offering a private placement of securities may also be required to comply with state securities laws (known as “blue sky” laws) as well, depending on the Regulation D exemption they are relying on.
Although private placements serve a valuable role in the capital formation process, they are by their nature very risky investments in that there is virtually no oversight from a regulatory agency. Moreover, investors in private placements often face significant problems exiting the investment as the securities they purchased in the private offering cannot be easily resold or liquidated as would be the case with a publicly traded security.
While investors can be attracted to private placements due to their potential for much higher returns than other investments, private placements also can be fertile ground for fraud due to a lack of thorough due diligence or complete disclosure in the offering documents. Moreover, the sales process of private placements creates an inherent risk of misrepresentations, and outright fraud. Brokers who sell private placements typically have the chance to earn very high commissions, ranging anywhere from 5%-15% of the entire investment. These high commissions create a conflict with the broker’s duty to recommend only investments that are suitable for the customer. Customers need to remember that their wealth is not a proxy for an appropriate suitability determination.
Ridgewood Energy Funds
Upon information and belief, retail investors across the county have been sold private placements in various Ridgewood Energy Funds. Investors have been reporting that recent Ridgewood Energy deals may not have produced returns in excess of investor's original capital, and investors are now stuck with a highly illiquid investment that may not be producing the income they were promised. Investors in the following Ridgewood Energy Funds are encouraged to contact an attorney to discuss the state of their investment:
• Ridgewood Energy Fund I
If you have suffered losses investing in a Ridgewood Energy investment, drilling project, oil and gas deal, or fund, your losses may be recoverable through securities arbitration. Please call Eccleston Law Offices at (312) 332-0000 to discuss your recovery options.
Eccleston Law represents individual and institutional investors nationwide to recover their investment losses caused by unsuitable investment recommendations, breach of fiduciary duty, negligence or other misconduct. We have extensive experience representing investors in arbitration and litigation disputes with securities broker-dealers and investment advisory firms, and have recovered tens of millions of dollars for investors.