Vernon Litigation Group recently filed a FINRA arbitration claim against Morgan Stanely. The claim alleges that Morgan Stanley's financial advisors mishandled savings entrusted to its care by concentrating the investor’s portfolio in speculative energy investments. Furthermore, the claim alleges that the defendant sold the investments as safe and secure income vehicles.
The arbitration filing asserts claims against Morgan Stanley for:
- Breach of fiduciary duty
- Failure to supervise
- Violations of FINRA conduct rules
Our attorneys regularly hear the baseless claim by financial professionals that significant losses in oil and gas investments are unforeseeable. In reality, this is a flawed argument because the energy sector is often subject to significant price drops. Thanks to our extensive litigation experience and legal talents, we know how to efficiently counteract and defeat this argument.
Oil Investments Have Always Been Volatile
For example, oil prices by the barrel are almost-always fluctuating. Whether data sets from half a year or half a century are used, there will be big changes in the price. In investment terms, a rapid and significant price change is known as volatility. Any investment firm or financial services group should know that oil prices have had high volatility for decades and that there is no reason to expect that to change any time soon.
Even when inflation is factored into the price for oil, fluctuations happen and the overall oil price compared to the current dollar value rarely goes up. This is to say that oil investments have high risks and low rewards, but most investors aren’t warned about it. The chances of a huge financial loss are compounded when overconcentrating a portfolio in the oil sector, too.
Conflicts of Interest & Overpromoting
Throughout our years of representing investors who have lost significant funds due to investment group failures and financial service oversights, we have seen countless cases of investment professionals over-relying on Master Limited Partnerships (MLP) and Business Development Companies (BDC) in the energy sector. In most of these cases, if not all of them, the investment professionals should be able to see the risk of making such large investments. But instead, they set those obvious risks aside and hope for the best, effectively gambling with an investor’s money, rather than using it carefully and logically.
To make matters even more convoluted, products from the energy sector are usually rife with conflicts of interest. Many financial firms that tell people to invest in oil, for example, own stock, properties, or other assets and interests in the recommended oil company. If you are going to invest in oil or another energy-related product, then you need to do your homework and due diligence to be sure you can trust the people recommending your investment aren’t the same ones who are selling the product.
Ready to Fight for You, 24/7
Our lawyers at Vernon Litigation Group continue to represent investors across the country who have suffered considerable losses due to bad investment advice and worse investment products. If you are concerned about your investments with a brokerage firm, please contact us toll-free by dialing (239) 319-4434 or by contacting us online. Initial consultations are always free and confidential.