Over the past few years, many investors, particularly retirees or those seeking income, have been advised by their brokerage firms and financial advisor to invest in oil and gas energy stocks or master limited partnerships (MLPs) and funds, for high yield or income. The MLPs, oil and gas energy stocks, or funds were recommended as secure, high quality income-generating investments that had modest risk. Many brokerage firms and financial advisors believed that the rising global demand for energy made these “must-own” investments for high yield, with limited downside risk.
In truth, these investments are risky and speculative due to their high correlation to oil prices which have historically been extremely volatile, as well as interest rate risk. Oil prices have always fluctuated widely and often unpredictably which is why speculators have flocked to trade them. The volatility of oil has wiped out many hedge funds and professional investors in the past, such as the Amaranth Advisors hedge funds which lost $6 billion in 2006.
Oil and gas energy stocks, MLPs and funds are high risk and speculative investment. No brokerage firm or financial advisor should have sold these investments to an investor with conservative or even moderate investment objectives. No retiree or other conservative investor who needed to protect their principal or earn income should have invested in these stocks and funds.
If you suffered a loss from the following stocks or funds, you may have the legal right to bring a claim for unsuitability, fraud or sales practice violations against the brokerage firm that sold it to you.
Kinder Morgan Energy Partners (KMP)
Energy Transfer Partners (ETP)
Energy Product Partners (EPD)
Plains All American Pipeline (PAA)
Magellan Midstream Partners (MMP)
Buckeye Partners (BKE)
Noble Energy (NE)
Williams Partners (WPG)
Regency Energy Partners (RGP)
ONEOK Partners (OKS)
MarkWest Energy Partners (MWE)
Linn Energy (LINE)
Encore Energy Partners (ENP)
Cheniere Energy Partners (LQP)
Alerian MLP ETF (AMLP)
JP Morgan Alerian MLP Index ETN (AMJ)
EV Energy Partners (EVEP)
Transamerica MLP Fund (TMLAX)
Yorkville High Income MLP (YMLP)