The Haselkorn & Thibaut, P.A. law firm is a nationwide investment fraud law firm (investmentfraudlawyers.com) investigating potential sales practice violations by financial advisors who were recommending United States Oil Fund (USO) and other energy sector-related investments to retail main street investors. It doesn’t appear to be helping traders who individually lost money trading USO stock.
USO is an exchange-traded fund (ETF) that tracks the futures market to give investors exposure to the price of oil. USO has been around for 14 years, and losses are now about 96% according to a MarketWatch.com article dated 4/22/20. With substantial investor inflows in recent weeks, this ETF was a popular way for retail investors to get some market exposure.
However, ETFs are sometimes inadequately presented to retail investor clients by financial advisors. These products are popular investment vehicles for institutional investors and professional traders who want to gain exposure to a particular asset class or sector. ETFs such as USO are widely available and popular with retail financial advisors as well as robo-advisors. Here, financial advisors may not have fully explained the complexities of the oil futures markets (the underlying investment in the USO ETF). Trading futures contracts on oil prices is not typically for main street retail investors. With extraordinary market volatility in this sector, it was not the time for most retail investors to get in or stay in. When some of the futures contracts went negative, it was likely a risk most investors (or even financial advisors that recommended USO) never expected (or disclosed). USO has declined over 65% year-to-date.
United States oil Fund, L.P. (Symbol: USO) – seeks the daily changes in percentage terms of its shares’ per share net asset value (“NAV”) to reflect the daily changes in percentage terms of the spot price of light, sweet crude oil delivered to Cushing, Oklahoma, as measured by the daily changes in the price of a specified short-term futures contract on light, sweet crude oil called the “Benchmark Oil Futures Contract,” less USO’s expenses. USO seeks to achieve its investment objective by investing primarily in futures contracts for light, sweet crude oil, other types of crude oil, diesel-heating oil, gasoline, natural gas, and other petroleum-based fuels.
NOTICE TO INVESTORS IN USO
The Haselkorn & Thibaut, P.A. law firm is a nationwide investment fraud law firm (www.investmentfraudlawyers.com) investigating potential sales practice violations by financial advisors who were recommending USO and many similar energy sector-related investments sold to investors.
For investors unaware of the real level of risk to which their investment principal was exposed if it was never properly disclosed (if it was ever disclosed at all) by their financial advisors, this can be a particularly tough blow.
Although Financial advisors may claim that these were unforeseen market events, and the current issues are distinct and unprecedented in some respects, the reality is that these are similar risks (only to a greater degree) to those experienced in the 2008-2009 financial crisis, and again in the energy markets in 2014-2015. These potential risks were material risks that should have been properly disclosed to clients before recommending these investments individually or as part of a portfolio or investment strategy.
Many financial advisors recommended energy securities to clients including ETFs, MLPs as well as high-yield or junk bonds, stocks, and other securities products that have now had devastating effect on investor portfolios and investment strategies. The question now for some investors is whether any of these past events and risks including the history of volatility, loss, bankruptcies, etc. within the energy industry part of the financial advisor’s pitch in recommending these securities? Probably not, in many cases.
Many of these investments were sold by financial advisors without proper risk disclosures, as these are considered risky securities, especially if there are individual investment, sector, or product concentration risk issues. In cases where these were recommended to retirees or similar conservative income-seeking investors there is the potential for sales practice abuse as a result of misrepresentations, but more often as a result of omissions of material fact, or due to a lack of proper supervision.
Investors Seeking to Recover USO Losses
For some investors, a private FINRA arbitration customer dispute enables them to bring a claim and potentially recoup their USO investment losses. These customer disputes typically involve only paper discovery and no depositions, and they are generally faster and more efficient compared to traditional court litigation, as they provide a private forum to resolve disputes more quickly and efficiently.
About Haselkorn & Thibaut, P.A.
Haselkorn and Thibaut, P.A. is a nationwide law firm specializing in handling investment fraud and securities arbitration cases. The law firm has offices in Palm Beach, Florida, on Park Avenue in New York, as well as in Phoenix, Arizona, Houston, Texas, and Cary, North Carolina. The two founding partners have nearly 45 years of legal experience.
Haselkorn & Thibaut, P.A. has filed numerous (private arbitration) customer disputes with the Financial Industry Regulatory Association (FINRA) for customers who suffered investment losses relating to issues similar to those matters mentioned above. There are typically no depositions involved, and those cases are typically handled on contingency with no recovery, no fee terms. Experienced attorneys at Haselkorn & Thibaut, P.A. are available for a free consultation as a public service. Call today for more information at 888-628-5590.
Robert Thomas has over 14 years experience in the investments on the institutional side of markets and has an “insider” view on the markets. In addition, he is an futures day trader that focuses on analyzing fundamentals, specifically earnings reports and technical levels. He has a Masters Degree in Business and Economics.