Contributor Since 2011
FS Energy and Power Fund closed its public offering to new investors this week, according to SEC Filings. The final closing for any outstanding subscriptions that were accepted by the company will occur on November 23, 2016. After the closing of the public offering, the company expects, subject to the discretion of the company's board of trustees and applicable law, the following will occur:
- FS Energy & Power Fund will continue to conduct quarterly tender offers pursuant to its share repurchase program.
- Distributions will be declared and paid on a monthly basis, as determined by the board.
-The company's distribution reinvestment plan will remain in effect and participating shareholders will be able to reinvest distributions at a price determined by the board of directors.
FS Energy & Power Fund total assets are $4 billion according to the latest tear sheet on their website. As a non-traded BDC, FS Energy & Power Fund limits how much stock investors can sell. Unfortunately investors may want to sell since performance has been below average due to diving oil prices.
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.The White Law Group continues to investigate the liability that brokerage firms may have for improperly selling BDCs like FS Energy & Power Fund. For more information on the investigation see, Alternative Investment Product: FS Energy and Power Fund.
Broker dealers that sell alternative investments are required to perform adequate due diligence on all investment recommendations to ensure that each investment recommendation that is made is suitable for the investor in light of the investor's age, risk tolerance, net worth, financial needs, and investment experience.
However, another problem with Reg D private placements is that the high sales commissions and due diligence fees the brokers earn for selling such products sometimes can provide brokers with an enormous incentive to push the product to unsuspecting investors who do not fully understand the risks of these types of investments or to outright misrepresent the basic features of the products - usually focusing on the income potential and tax benefits while downplaying the risks.
Fortunately, FINRA does provide for an arbitration forum for investors to resolve such disputes and if a broker or brokerage firm makes an unsuitable investment recommendation or fails to adequately disclose the risks associated with an investment they may be found liable for investment losses in a FINRA arbitration claim.
To determine whether you may be able to recover investment losses incurred as a result of your purchase of FS Energy & Power Fund or another Franklin Square BDC, please contact The White Law Group at 1-888-637-5510 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 and its representation of investors, please visit 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.