January 6, 2016 Comments (0) Blog

Securities Fraud Investigation involving City National Resources High Yield Trust

(Last Updated On: January 6, 2016)

Have you suffered losses investing in City National Resources High Yield Trust?  If so, the securities attorneys of The White Law Group may be able to help you recover your losses in a FINRA arbitration claim against the brokerage firm that recommended the investment.

Upon information and belief, City National Resources High Yield Trust is a unit investment trust (or UIT) focused on the energy sector.  City Natural Resources High Yield Trust plc is a United Kingdom-based investment trust. The investment objective of the Company is to provide shareholders with capital growth and income predominantly from a portfolio of mining and resource equities, and of mining, resource and industrial fixed interest securities (including, but not limited to, preference shares, loan stocks and corporate bonds, which may be convertible and/or redeemable).

A unit investment trust (UIT) is an exchange-traded mutual fund offering a fixed (unmanaged) portfolio of securities having a definite life.  The major distinguishing factor between a mutual fund and a UIT is that since it is unmanaged, the investments don’t change (i.e. you own a basket of investments that remain the same during the duration of the UIT).  (For a great article on the pros and cons of UITs visit http://www.wsj.com/articles/the-pros-and-cons-of-buying-unit-investment-trusts-1446433527)

The main problem with UITs is that since they are unmanaged, if the market moves against the positions in the UIT you are stuck holding those positions until the end of the UITs duration (as opposed to a mutual fund where the money manager can make adjustments and dump underperforming investments).  This can be particularly troubling in very hard hit sectors like the oil and gas market over the last year to 18 months.

Many UITs focused on the oil and gas sector, like City National Resources High Yield Trust, have suffered enormous losses as the oil and gas sector has collapsed amid declining oil prices.

Another problem with UITs is their commission structure.  UITs are extremely high commission, often explaining the motivation of the sales agent in recommending the investments.

The White Law Group is investigating the liability brokerage firms may have for recommending UITs, like City National Resources High Yield Trust, that are focused on the oil and gas sector.  Brokerage firms are required to perform adequate due diligence on any investment they recommend and to ensure that all recommendations are suitable for the investor in light of that particular investor’s age, investment experience, net worth, investment objectives, and income.  Firms that fail to perform adequate due diligence or that make unsuitable recommendations can be held responsible for investment losses in a FINRA arbitration claim.

If you suffered losses in City National Resources High Yield Trust and would like to discuss your litigation options, please call the securities attorneys of The White Law Group at 312/238-9650 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 in FINRA arbitration claims throughout the country.  For more information on the firm, visit http://www.whitesecuritieslaw.com.