January 12, 2016 Comments (0) Blog, Current Investigations

Investor Alert: American Standard Energy Corporation

(Last Updated On: September 7, 2016)

Have you suffered investment losses in American Standard Energy Corporation? If so, The White Law Group may be able to help you recover your losses by filing a FINRA Dispute Resolution claim against the brokerage firm that sold you the investment.

According to Bloomberg, American Standard Energy Corp. engages in acquisition, development, production, and exploration of oil and natural gas leasehold properties. The company was founded in 2010 and is based in Las Vegas, Nevada. American Standard Energy Corp. operates as a subsidiary of American Standard Energy Corp.

On August 3, 2015, American Standard Energy Corp., along with its affiliate, filed a voluntary petition for reorganization under Chapter 11 in the US Bankruptcy Court for the Western District of Texas. The company is seeking to restructure $40 million in secured debt, according to court documents. The debtor said that it also sought protection in bankruptcy court to halt foreclosure and enforcement actions brought by its unsecured creditors over its assets. Unfortunately in December there was more bad news for investors. American Standard Energy Corp. filed a lawsuit in Texas accusing two of the bankrupt oil and gas producer’s directors and officers of selling property they didn’t have complete title to, an alleged scheme that has harmed the company’s creditors and jeopardized a $20 million sale of the debtor’s assets.

The complaint was filed on Dec. 31 against the company’s co-founder Randall Capps and his son-in-law, former Chief Executive Scott Feldhacker. The lawsuit alleges that through a series of deals involving Capps’ company Geronimo Holding Corp., the duo sold property that they didn’t own. ASEN and its Delaware affiliate, now under new management, say that the scheme has put into jeopardy a proposed $20 million asset sale and could result in a reduction of approximately $7 million in the purchase price. The lawsuit says that the alleged scheme harmed ASEN’s unsecured creditors and secured creditor Pentwater Capital Management LP.

The complaint asserts claims against Feldhacker and Capps for fraud, breach of contract and fiduciary duty to ASEN, unjust enrichment and civil conspiracy, among others. The lawsuit seeks unspecified damages against the pair. The company is one of several oil and gas producers in the U.S. that have filed for bankruptcy in the last year as the industry has been hit hard by historically low prices.

American Standard Energy Corporation is a Reg D private placement. The trouble with private placements, 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. An additional risk inherent to these offerings is also the general risk that comes with the energy market – a market that has seen enormous losses over the last few years due to the declining cost of oil and other energy commodities.

The White Law Group is investigating the liability that brokerage firms may have for improperly selling oil and gas private placements like American Standard Energy Corporation. Broker dealers that sell private placements 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 American Standard Energy Corporation, 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 firm and its representation of investors, visit www.WhiteSecuritiesLaw.com.