The continuing decline in the health of the oil and gas market is taking a toll on companies operating in this space. With high expense ratios, some are on the brink of default and some bankruptcy. Nine Point Energy Holdings Inc. (NPEH), a Denver-based, company engaged in private exploration and production, along with Foxtrot Resources LLC, an affiliate have filed for bankruptcy protection.
NPEH, which reported assets and liabilities in the range of $100 to $500 million, filed for chapter 11 protection in the bankruptcy court for the District of Delaware (Case No. 21-10570), on 15th March, 2021. It has been reported that in 2017 the company raised capital through the Form D route and ended up raising over $5M.
The NPEH bankruptcy filing once again brings into focus the need for exercising caution and matching an asset with an investor’s profile and objectives.
With declining oil prices and related energy products, the energy industry has faced losses over the last few years. What might initially seem like a lucrative proposition soon turns into a nightmare when the bottom drops out of the market. Retail investors, in particular, investing with their own money, often to secure their own future, have to be careful.
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The issue is compounded by investment advisors not highlighting the risks associated with such investments, even downplaying them, leading investors to believe them to be safe. The Financial Industry Regulatory Authority (FINRA) requires brokerage firms to disclose all risks present in a potential investment when they make an investment recommendation to an individual investor. They are also required to ensure that the recommended investment is suitable, taking into account the investor’s objectives, investment experience, age, and risk profile. Failure to do so, or misleading a client, and making an unsuitable recommendation can lead to the advisor being held liable for investment losses.
It is believed that the high commissions earned by advisors for selling such products might be one of the main causes of unsuitable investment advice.
Haselkorn & Thibaut, P.A., a national securities fraud, securities arbitration, and investor protection law firm with offices in Texas, Florida, New York, Arizona, and North Carolina has taken up investigations on behalf of its clients potentially impacted by having being sold unsuitable investments like NPEH.
If you have an investment in NPEH that has lost value and believe it was on the basis of an unsuitable recommendation, or to know more about the representation of investors in a FINRA arbitration claim, we encourage you to reach out to their investment fraud attorneys for a free consultation. You can reach them at 1 888-628-5590 or visit their website for a free consultation.