Sanchez Energy Corp. – Reportedly Files Chapter 11
The White Law Group is investigating potential securities fraud claims involving broker dealers who may have unsuitably recommended Sanchez Energy Corp. to investors.
Sanchez Energy, a Houston oil company that drilled in the Eagle Ford Shale of South Texas, reportedly filed for Chapter 11 bankruptcy last week.
The company officials listed $2.1 billion in assets and $2.8 billion in debt, according to court records. Sanchez’s top creditor was listed as Delaware Trust Company, which holds nearly $1.8 billion in senior notes.
The company filed a form D private placement to raise capital from investors 2013 in Houston, Texas.
The trouble with alternative investment products, like Sanchez Energy Corp., is that they involve a high degree of risk. They 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. The energy market has seen enormous losses over the last few years due to the declining cost of oil and other energy commodities. These investments may seem wise at first, until the dramatic drop in distributions.
Oil & Gas Investments – suitable for you?
Broker dealers that sell alternative investments are required to perform adequate due diligence on all investment recommendations. They must 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 issue with alternative investments is that the high sales commissions and due diligence fees. These high commissions and fees can provide brokers with an enormous incentive to push the product to unsuspecting investors who do not fully understand the risks. They may 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. 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.
Free Consultation with a Securities Attorney
If you are concerned about your investment in Sanchez Energy Corp., 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.