February 17, 2017 Comments (0) Current Investigations

Gevo Inc. Recovery of Investment Losses

Cypress Income Fund VIII
(Last Updated On: April 17, 2017)

Concerned about investment losses in Gevo Inc.?

Have you suffered losses investing in Gevo Inc.? If so, The White Law Group may be able to help you recover your losses by filing a FINRA Arbitration claim against the brokerage firm that sold you the investment.

Gevo is a leading renewable chemicals and advanced biofuels company located in Colorado, according to their website. They claim to have developed bio-based alternatives to petroleum-based products using a combination of synthetic biology and chemistry.

Shares in Gevo Inc. dropped more than 31 percent during Tuesday’s trading and fell another 14 percent Wednesday. The company claimed it would issue more stock to raise money but also issued a warning about its future.

Possibility of Bankruptcy for Gevo Inc.?

According to SEC Filings, Gevo Inc. plans to sell nearly $12 million in stocks and warrants to raise money.

Unfortunately for investors, they also stated the company expects to incur future net losses as they fund development and commercialization of their product candidates. According to the filings, Gevo Inc. has been financing operations primarily with proceeds from multiple sales of equity and debt securities, borrowings under debt facilities and product sales.

They also admitted the possibility of filing for bankruptcy. In the meantime, the intentions are to fund future operations through additional private and/or public offerings of debt or equity securities.

“We will have to seek other strategic alternatives, including other sources of financing and, if unsuccessful, may be forced to seek the protection of bankruptcy court by filing for bankruptcy,” according to the SEC filing.

The White Law Group is investigating the liability that brokerage firms may have for recommending investments in energy private placements such as Gevo Inc.

According to SEC filings, it appears that Gevo Inc often raises money for investments through Reg D private placements. These Reg D private placements are then typically sold by brokerage firms in exchange for a large up front commission, usually between 7-10%.

The Trouble with Private Placements

The trouble with alternative investment products, like Gevo Inc. 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 Gevo Inc. offerings is also the general risk that comes with the energy market – a market that has seen enormous losses over the last few years.

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.

Also brokers can earn high commissions for selling Reg D private placements. This may drive them 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.

Free Consultation

To determine whether you may be able to recover investment losses incurred as a result of your purchase of Gevo Inc. private placement investment, 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. For more information on the firm, visit www.WhiteSecuritiesLaw.com.