Franklin Square Energy and Power Fund’s Board Suspends Repurchase Program
If you are someone who invested in Franklin Square Energy and Power Fund (FSEP), you have likely experienced losses. The non-traded business development company’s (BDC) board recently announced that it was suspending its repurchase program and its share price has once again plunged.
While FSEP has pointed to COVID-19, the resulting turbulence, and oil prices sinking as reasons for its current woes, investors may have reason to pursue broker fraud and negligence claims if their broker-dealer unsuitably recommended this investment or failed to apprise them of the risks involved.
Our stockbroker fraud lawyers at Shepherd Smith Edward and Kantas (SSEK Law Firm) are investigating customer complaints involving FS Energy & Power Fund. Contact us today.
What is the FS Energy & Power Fund?
This non-traded BDC is sponsored by FS Investments Solutions LLC and invests in debt and equity securities of private energy and power companies. It was launched in 2011. By November 2016, FS Energy and Power Fund had closed its public offerings, no longer taking on new investors. In September 2019, its investment portfolio was reported at $3.8B.
A lot has changed since then. In late March, FSEP announced that it was suspending investor distributions, along with its distribution reinvestment plan, following the pandemic. But even before that, going back to 2017, when Franklin Square Energy & Power Fund had dropped to $1.50/share, this BDC was already causing concerns for investors.
In April 2020, secondary market Central Trade reported that FSEP was once again selling at that $1.50/share price. As of August 31, 2020, the FS Investments website shows that the average annual return, YTD, for FSEP was down by -37.49%.
Non-Traded BDCs are Risky Investments
It is important to point out that business development companies are not suitable for every investor. While appealing because investing in them can provide healthy returns, there are serious risks involved.
Non-traded BDCs aren’t publicly traded on a stock exchange. They are illiquid and it could be years before an investor can expect to access their initial investment. Non-traded BDCs are vulnerable to market volatility and significant events.
Many brokers like this particular alternative investment because it can earn them high commissions. It is this incentive that can pose a conflict of interest, compelling some brokerage firms to sell FS Energy and Power Fund and other non-traded BDCs to investors for whom they are too risky, who never had the portfolio or net worth that could have withstood such risks, or had no idea what type of investment they were taking on.
Now, these investors, including retail investors, retirees, and senior investors, are the ones paying the price.
Stockbroker Fraud Attorneys Fighting For Investors Nationwide
Our broker fraud lawyers can help you determine whether you have grounds for a claim. SSEK Law Firm has successfully represented non-traded BDC investors and oil and gas investors throughout the US for 30 years. We have recovered tens of millions of dollars on our clients’ behalf.
SSEk Law Firm will continue to zealously pursue financial recovery for investors who have been harmed due to stockbroker misconduct, negligence, or a brokerage firm’s failure to supervise its registered representatives.
Contact us for your free consultation so that we can help you determine whether you have grounds for an FSEP investor fraud claim.