King Wood Royalties LLC, Securities Investigation
The White Law Group is investigating the liability that FINRA registered brokerage firms may have for improperly selling high-risk energy investments, like King Wood Royalties LLC, to its clients.
Resource Royalty, an oil and gas mineral rights sponsor, reportedly filed a form D to raise capital from investors in 2017 for the offering of King Wood Royalties LLC. The total offering amount was purportedly $8,075,000, with sale commissions and fees estimated at more than 6% of the offering amount.
Unfortunately, some brokers may have downplayed the risks associated with oil and gas private placement investments. They may have misled investors into thinking that they are “safe” investment products. The high sales commission brokers earned for selling such products may provide some brokers with enough incentive to push the product to unsuspecting investors.
Many oil and gas LPs have high expense ratios, and due to the decline in the overall health of the oil and gas market, are suffering. Some are on the brink of default, or worse yet, bankruptcy. Such an outcome is extreme, but not unforeseen. It only highlights the unsuitability of these investments for most retail investors – particularly in large concentrations.
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.
Prior to making recommendations to an individual investor, brokerage firms are required by the Financial Industry Regulatory Authority (FINRA) to disclose all the risks of an investment. Recommendations should only be made if the investment is suitable for an individual investor given their age, investment objections, investment experience and risk tolerance.
If a broker misleads a client or makes unsuitable investment recommendations they can be liable for investment losses.
Recovery of Investment Losses
If you are concerned about your investment in King Wood Royalties LLC, the securities attorneys at The White Law Group may be able to help. Please call the offices at 888-637-5510 for a free consultation with a securities attorney.
The White Law Group is a national securities fraud, securities arbitration, and investor protection law firm with offices in Chicago, Illinois.