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Written by 12:56 pm Current Investigations

FS Energy & Power Fund Decreases Price Under Distribution Reinvestment Plan

FS Energy & Power Fund

Recovery of Investment Losses in FS Energy & Power Fund

 Have you suffered losses investing in FS Energy & Power Fund? If so, The White Law Group may be able to help you recover your losses by filing a FINRA arbitration claim against the brokerage firm that sold you the investment.

 FS Energy & Power Fund is a non-traded business development company (BDC). The fund invests primarily in the debt and, to a lesser extent, equity securities of private U.S. energy and power companies.

According to recent SEC filings, on April 28, 2017, the board of trustees of FS Energy and Power Fund decreased the price at which it will offer shares under its distribution reinvestment plan to $7.70 per share from $7.75 per share.  The change ensures that shares are not issued at a price per share greater than 2.5% of NAV per share.

According to the latest tear sheet on their website, total assets are $4 billion.

As a non-traded BDC, the FS Energy and Power Fund limits how much stock “exiting” investors can sell. Unfortunately investors may want to exit since performance has been lacking due to energy prices.

Problems with Alternative Investments

The trouble with alternative investment products, like FS Energy & Power Fund and other similar BDCs, 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.

The White Law Group continues to investigate the liability that brokerage firms may have for improperly selling BDCs like FS Energy & Power Fund.

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 problem with Reg D private placements is that the high sales commissions and due diligence fees the brokers earn for selling such products sometimes can provide brokers with an enormous incentive to push the product to unsuspecting investors who do not fully understand the risks of these types of investments or to outright 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 and 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

To determine whether you may be able to recover investment losses incurred as a result of your purchase of FS Energy & Power Fund or another Franklin Square BDC, please contact The White Law Group at 888-637-5510 for a free consultation.

The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Franklin, Tennessee. 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.


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