Recovery of Investment Losses in FS Energy & Power Fund FSEP
The White Law Group continues to investigate potential claims involving broker dealers who may have unsuitably recommended high risk BDCs like FS Energy & Power Fund (FSEP) to investors.
FS Energy & Power Fund (FSEP) is a non-traded business development company (BDC) that invests primarily in the debt and income-oriented securities of private U.S. energy and power companies. The BDC is sponsored by FS Investments.
The Trouble with BDCs
The trouble with Business Development Companies (BDCs), like FS Energy & Power Fund, 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.
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.
Often brokers are incentivized to sell Reg D private placements due to the high sales commissions and due diligence fees that they can earn. Some brokers may misrepresent the basic features of the products – usually focusing on the income potential and tax benefits while downplaying the risks. Another problem with alternative investments is the lack of liquidity.
Unfortunately for investors, Central Trade & Transfer, a secondary market for private placements, is listing shares of FSEP for just $6.25 per share. The original offering price was $10.00/share.
The Financial Industry Regulatory Authority does provide for an arbitration forum for investors to resolve such disputes. If your 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.
Have you suffered losses investing in FSEP or another FS Investment offering? If so, the securities attorneys at The White Law Group may be able to help you. 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.