May 19, 2016 Comments (0) Blog, Current Investigations

Update: Magnum Hunter Resources

Bradford Drilling
(Last Updated On: February 14, 2017)

Concerned about investment losses with Magnum Hunter Resources?

Have you suffered losses investing in Magnum Hunter Resources? If so, the attorneys at The White Law Group may be able to help through FINRA arbitration.

The White Law Group continues to investigate the liability that brokerage firms may have for recommending investments in oil and gas companies, including Magnum Hunter Resources’ private placements.

Magnum Hunter Resources Corporation is an independent oil and gas company engaged in the exploration for of crude oil, natural gas and natural gas liquids in the US and Canada.  The company was founded in 1997 and is based in Irving, Texas.

Magnum Hunter Resources Corporation (MHR),  announced May 18th the company has emerged from bankruptcy–less than five months after filing.  Unfortunately for the old shareholders MHR achieved their restructuring by converting what was $1 billion worth of debt into shares of stock, according to reports.

The company often raises money for investments through Reg D private placement offerings such as Energy Hunter Partners 2011 A Ltd.  These Reg D private placements are then typically sold by brokerage firms in exchange for a large up front commission, usually between 7-10%.

According to a letter to investors dated May 26, 2016, due to the Magnum Hunter’s bankruptcy filing in December 2015, the partnership in Energy Hunter Partners 2011 A Ltd and the other private placements have been dissolved. This is bad news for investors.

The Trouble with Private Placements

The trouble with alternative investment products, like Magnum Hunter Resources offerings, 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 and bonds.

An additional risk inherent to Magnum Hunter Resources offerings is also the general risk that comes with the energy market – a market that has seen enormous losses over the last few years.

Specifically, The White Law Group has been investigating these Magnum Hunter Resources offerings:

Energy Hunter Partners 2013 A Drilling & Production Fund Ltd
Energy Hunter Partners 2012 A Drilling & Production Fund Ltd
Energy Hunter Partners 2011 A Ltd

Broker dealers that sell alternative investments are required to perform adequate due diligence on all investment recommendations. They must ensure that each investment is suitable for the investor in light of the investor’s age, risk tolerance, net worth, financial needs, and investment experience.

However, another unfortunate by product of Reg D private placements is that the high sales commission brokers earn for selling such products may provide some brokers with enough incentive to push the product to unsuspecting investors who do not fully understand the risks of these types of products.

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 liable for investment losses.

If you have concerns regarding an investment in Magnum Hunter Resources and would like to speak with a securities attorney about your litigation options, please call The White Law Group at 888-637-5510 for a free consultation.

The White Law Group, LLC is a national securities fraud, securities arbitration and investor protection law firm with offices in Chicago, Illinois and Vero Beach, Florida.