Shepherd Smith Edwards & Kantas Investigates Financial Advisors That Recommended AMLP and Other Oil & Gas Master Limited Partnerships

SSEK Investigating Financial Advisor That Recommended Unsuitable MLPs To Investors 

Shepherd, Smith, Edwards & Kantas, a law firm specializing in representing wronged investors, is looking into allegations against financial advisors that concentrated their clients in Alerian MLP ETF (“AMLP”) and other oil & gas related master limited partnerships (“MLPs”) amid the significant downturn in oil prices since February.  

What Is The AMLP Fund? 

The Alerian MLP is an exchange-traded fund (“ETF”) that attempts mimic exposure to the Alerian MLP Infrastructure Index, a weighted composite of MLPs in the storage and pipeline sector of the Oil and Gas industry.  MLP, as the acronym suggests, is a type of Limited Partnership.  

By law, MLPs are limited to investments in natural resources and real estate.  Most MLPs are involved in the Oil and Gas industry.  Investors in AMLP have direct exposure to the energy sector and are subject to declines in Oil prices notwithstanding the promise of many advisors that Alerian MLP ETF was immune to oil prices.

AMLP has historically underperformed its index by a significant margin.  For example, it only returned roughly 2/3 or, 67.4% of the ETRACS Alerian MLP Infrastructure Fund (“MLPI”), which tracked the same index for the first more than five years of its existence.  

The ETF continued with its underperformance throughout its history.  Many advisors advocating for the purchase of AMLP represented that while it underperformed the market on the upside, it would outperform the market on the downside because of its limited correlation to oil prices.  This turned out to be absolutely false.  

In March of 2020, Alerian MLP fell well below $2 in price, resulting in the ETF being at risk of being delisted from the exchange.  On May 18, 2020, it performed a 1 for 5 reverse split, increasing the “share price”, but not increasing the value for investors.  

While the AMLP ETF has recovered some, as have oil prices, it remains at historically low levels and, given its structure, may struggle to return anywhere near its prior highs.  The same is true for individual MLPs which have performed very poorly over the recent downturn and may continue to perform poorly unless oil prices return to above $50 a barrel.

Suffered Investment Losses Due To Master Limited Partnerships? Our Securities Fraud Attorneys Can Help

Many investors were shocked that a once represented “safe” investment has experienced such large downturns. 

These price declines can be severely impacted if the accounts were leveraged with margin, credit lines or futures. SSEK has experience in representing customers of financial advisors who misrepresent the risks associated with an investment or unsuitably recommend obscure strategies.  Such actions are unsuitable, and as such, may violate industry standards and Rules. 

If you were a victim of securities fraud, breaches of fiduciary duties or just plain negligence, it is not your fault.  The experienced attorneys at SSEK are experts at FINRA arbitrations and/or dealing with financial advisors who have fallen under FINRA/SEC scrutiny.  

For the last 30 years, SSEK has filed thousands of FINRA claims on behalf of consumers wronged by unscrupulous brokers, advisors and brokerage firms. Contact us today for free, no-obligation case consultation and we’ll help you determine whether you have grounds for a claim.

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