September 7, 2016 Comments (0) Current Investigations

Latest News: FS Energy and Power Fund

FS Energy and Power Fund
(Last Updated On: June 27, 2017)

FS Energy and Power Fund Investment Losses

The White Law Group continues to investigate FS Energy and Power Fund. If you have suffered losses investing in FS Energy and Power, the attorneys at 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.

FS Energy and Power Fund (FSEP) is a non-traded business development company (BDC) designed to provide investors a combination of income, growth and diversification by investing primarily in the debt and income-oriented securities of private U.S. energy and power companies.

FS Energy and Power fund is investment offered by Franklin Square Capital Partners. According to their website, Franklin Square Capital Partners gives investors access to alternative asset classes, strategies and asset managers that typically have been available to only the largest institutional investors.

In August, Philadelphia Business Journal reported that Franklin Square Capital Partners said it is rebranding the company under the name FS Investments.

The transition coincides with the firm’s expansion of its alternative investment solutions, as well as its education and distribution platforms. Its affiliated broker-dealer, FS2 Capital Partners, is now called FS Investment Solutions.

Franklin Square often raises money for investments through Reg D private placement offerings like the company did for FS Energy & Power Fund.  These Reg D private placements are then typically sold by brokerage firms in exchange for a large up front commission, usually between 7-10%, as well as additional “due diligence fees” that can range from 1-3%. FS Investments is planning to launch two additional alternative funds and a liquid alternatives platform in 2017.

The Trouble with Alternative Investments

The trouble with alternative investment products, like FS Energy & Power Fund and other similar BDCs, 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.

The White Law Group is investigating the liability that brokerage firms may have for improperly selling BDCs like FS Energy & Power Fund.

Broker dealers that sell alternative investments 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.

Recovery of Investment Losses

To determine whether you may be able to recover investment losses incurred as a result of your purchase of FS Energy & Power Fund or another Franklin Square BDC, 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.