Written by The White Law Group• March 15, 2021• 3:15 pm• Blog, Current Investigations, Securities Fraud Articles

FSEP (FS Energy & Power Fund) Lawsuits Updated

The downward trend in value apparently continues for FSEP, featured by top securities fraud attorneys, The White Law Group

FS Energy & Power Fund Secondary Price Suggests Losses for Investors, $1.50/share

Concerned about your investment in FS Energy & Power Fund (FSEP)?

Are you concerned about your investment in FSEP (FS Energy & Power Fund)? If so, the securities attorneys at The White Law Group may be able to help you by filing a FINRA Dispute Resolution claim.

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FSEP (FS Energy & Power Fund) is a publicly registered, non-traded business development company sponsored by FS Investments. The fund focuses primarily on investing in the debt and income-oriented equity securities of privately held U.S. companies in the energy and power industry. FSEP’s investment objectives are to “generate current income and long-term capital appreciation,” according to its website.

FSEP Suspends Share Repurchase Program and Distributions

The board of FS Energy and Power Fund just announced its plans to terminate the company’s quarterly tender offer and suspend the share repurchase program. The board is citing difficult market conditions due to the coronavirus (COVID-19) pandemic and events relating to crude oil production as the reason for the changes. The company also suspended regular cash distributions to shareholders after March 31, 2020.

NAV and DRP Continues Decline

The downward trend in value apparently continues for FSEP. As of September 30, 2019 the share price for FSEP under its distribution reinvestment plan (the “DRP”) is $5.85 per share. We reported in January 2018 a decrease from $7.15 per share to $6.70 per share, and in July 2017 it decreased from $7.65 per share to $7.20 per share.

According to the company, the purpose of these decreases is to ensure that the Company does not issue shares under the DRP at a price per share that was more than 2.5% greater than the NAV Per Share.

Unfortunately for investors, the NAV per share is currently $3.28 per share. Shares were originally offered for $10.00 per share.

According to Central Trade and Transfer, a secondary market for private placements, shares of FSEP were recently sold for just $1.50 per share. This could mean significant losses for investors.

Investors may have recovery options

The trouble with alternative investment products like FSEP 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. Another issue is illiquidity – it may be difficult to find a buyer when you are ready to sell the investment, and when you do, it may be at a loss.

The White Law Group continues to investigate the liability that brokerage firms may have for unsuitably recommending BDCs like FSEP to investors.

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.