Have you suffered losses investing in FS Energy and Power Fund? If so, The White Law Group may be able to help.
Founded in 2007, Franklin Square Capital Partners manage a variety of BDCs including non-traded, as well as a publicly traded BDC on the NYSE. A Business Development Company ("BDC") is a form of investment company that invests in small and mid-sized businesses. Investors can buy shares in a BDC, and the money from their investment are used to fund the businesses. In turn, investors can profit from dividends paid on their investments, or, in some cases, the sale of their shares. For an in depth look at BDCs, go here.
Franklin Square often raises money for investments through Reg D private placement offerings like the company did for FS Energy & Power Fund. These Reg D private placements are then typically sold by brokerage firms in exchange for a large up front commission, usually between 7-10%, as well as additional "due diligence fees" that can range from 1-3%.
The trouble with alternative investment products, like FS Energy & Power Fund and other similar BDCs, is that they involve a high degree of risk and are typically sold as unregistered securities which lack the same regulatory oversight as more traditional investment products like stocks or bonds.
In addition, oil and gas companies have been flailing since mid 2014 when oil prices dropped. Haynes and Boone has tracked 102 North American oil and gas producers that have filed for bankruptcy since the beginning of 2015. These bankruptcies, including Chapter 7, Chapter 11, Chapter 15, and Canadian cases, involve approximately $67.8 billion in cumulative secured and unsecured debt.
Not surprisingly, given the name, FS Energy and & Power Fund has a lot of oil and gas exposure. According to FS Investments website FS Energy and Power Funds Top Ten Holdings are:
12.8% FourPoint Energy, LLC -
Exploration and production company focused on the Anadarko and Permian Basins
8.9% Ascent Resources - Utica, LLC (restructuring $1.2 billion of debt)
Acquires and develops unconventional resources in the Utica Shale
5.5% Sunnova Energy Corp.
Independent power company that owns and operates residential solar systems throughout the U.S.
3.6% Extraction Oil & Gas Holdings, LLC
Independent energy company focusing on the exploration and production of oil and gas reserves in the Rocky Mountains
3.3% Canbriam Energy Inc.
Intermediate exploration and production company with a focus on liquids-rich natural gas
2.9% Allied Wireline Services, LLC
Full-service wireline company serving the domestic oil and natural gas industry
2.9% Altus Power America, Inc.
Owns and develops on-site solar generation facilities for commercial & industrial ("C&I") customers
2.8% Synergy Offshore LLC
Exploration and production company focused on resources in North Central Montana
2.6% Warren Resources, Inc. (Filed for bankruptcy, June 2016)
Independent energy company engaging in the exploration, development and production of domestic onshore crude oil and gas reserves
2.4% Vantage Energy II, LLC (filed for bankruptcy, December 2015)
Natural gas exploration, acquisition and development company
Given these holdings, it appears losses in the FS Energy and Power Fund are likely.
The White Law Group is investigating the liability that broker-dealers and financial professionals may have for improperly recommending FS Energy and Power Fund and other FS investments to its clients.
For more information on The White Law Group's investigation of FS Energy & Power Fund, go here.
Brokerage firms and financial advisors have a fiduciary duty to perform adequate due diligence on any investment they recommend and to ensure that such recommendations are appropriate for their client in light of that particular clients' age, income, investment experience, investment objectives, and net worth.
If you suffered losses investing in FS Energy & Power Fund, the securities attorneys of The White Law Group at (888) 637-5510 for a free consultation.
The White Law Group is a national securities fraud, securities arbitration, and investor protection law firm with offices in Chicago, Illinois and Vero Beach, Florida. The firm represents investors throughout the country in claims against their brokerage firm.
For more information on The White Law Group, visit http://www.whitesecuritieslaw.com.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.