Investors of Main Street Natural Gas Bonds are claiming that not only did brokers fail to disclose the risks associated with investing in them, but they also failed to inform their clients that the bonds could be affected by the financial health of Lehman Brothers. Wall Street firms had marketed and sold Main Street Natural Gas Bonds as conservative, safe municipal bonds when, in fact, they were Lehman Brothers-backed complex derivative securities. As a result, when the investment bank filed for bankruptcy in 2008 the bonds’ trading value dropped.
If you were an investor who lost money because you invested in Main Street Natural Gas Bonds that you were told were safe, conservative investments, please contact our stockbroker fraud lawyers immediately to request your free case evaluation. You may have grounds for a securities fraud claim.
Main Street Natural Gas
Set up by the Municipal Gas Authority of Georgia in 2006, Main Street Natural Gas, a non-profit corporation, was supposed to borrow money to purchase natural-gas derivatives-contracts that bet on natural gas’s future price. According to USA Today, the objective was to secure low cost, long-term, natural-gas supply for 73 municipal-owned securities.
In April 2008, Main Street gave $700 million in borrowed money to Lehman investment bank. In exchange, Lehman promised it would deliver 160 billion cubic feet of natural gas at a price that was lower than market value for the next three decades.
When Lehman Brothers filed for bankruptcy in September 2008, it had delivered under 1% of the gas that was promised. The $700 million, instead of being used to purchase natural gas, ended up in a pool to pay back the investment banks’ creditors. Now, investors are the ones that are having to pay the price with their investment losses.