What is FS Energy & Power Fund?

Sponsored by FS Investment Solutions, FS Energy & Power Fund (FSEP) —also known as the Franklin Square Energy & Power Fund — is a non-traded business development company (non-traded BDC) that invests in the debt and equity securities of private energy and power companies that are typically involved in crude oil, natural gas liquids, coal, natural gas, and other kinds of power. FSEP is an illiquid, high-risk investment.

In the US, our seasoned FS Energy & Power Fund investment attorneys work with investors in recouping their losses. It isn’t just retail investors, retirees, or other conservative investors who have lost money in this closed-end management investment company.

Many of those that invested in this risky private business development company were high-net-worth investors.

Contact Shepherd Smith Edwards and Kantas (SSEK Law Firm at investorlawyers.com) at (800) 259-9010 today.

A Few of the Significant Events Involving FSEP
  • July 2011: FS Energy & Power Fund was launched and investors paid $10/share during the offering.
  • November 2016: FSEP closed its public offering and stopped bringing in new investors.
  • March 2020: FS Energy & Power Fund suspended investors distributions. As well, the non-traded BDC’s Board ended its quarterly tender offer this month. Its members blamed COVID-19 and the pandemic’s impact on crude oil as to why these changes were necessary. By September 2020, FSEP’s estimated net asset value (NAV) was $3.32/share.
  • September 29, 2021: FSEP’s Board of Trustees announced a cash distribution of $.03/share to be paid to shareholders of record.
FSEP Investors Were Charged Extremely High Commissions and Other Fees

Like all non-traded BDCs, FS Energy & Power Fund charged high commissions, which may, unfortunately, have been an incentive for some broker-dealers and their financial advisors to recommend the Fund to customers, even when it was unsuitable for their investing goals. There are FSEP investors who should never have been sold shares.

  • FSEP charged investors more than 11% in upfront commissions and fees. This means that just 88.5% of their money went to the actual investment. Just to get their principal back investors would have needed to make a 13% return.
  • Certain yearly expenses also may have been charged to investors.

All of these costs and fees would have made it difficult for any FSEP investor to make money even if there were positive returns.

“Blind Pool” Factor Added to FS Energy & Power Fund’s Risk-Level

Our investment attorneys have determined that FSEP began as a blind pool. This means that the Fund had not yet identified, made, or been contracted to make investments when investors started buying shares. That fact alone would have made it hard to give investors an accurate assessment of both the true risks involved and their actual chances of making money.

How Can You Know Whether You Have Grounds for a Claim To Recover Losses From FSEP?

Unfortunately, many FSEP investors have sustained significant investment losses. Although business development companies tend to offer high yields due to their use of leverage, and because they can garner higher than average interest income on loans on businesses that are more thinly capitalized, it is easy for inexperienced investors to not fully understand the risks involved.

This may also happen because a financial advisor made misrepresentations and omissions when marketing FS Energy & Power Fund to customers or merely failed to apprise them of the risks they were taking on. That said, brokerage firms should not have been recommending FSEP to retail investors, retirees, and other inexperienced investors.

Knowledgeable FSEP Energy and Power Fund Investment Lawyers

Determining the cause of your FSEP investment losses can be difficult unless you have skilled securities attorneys helping you. Once you know that you do have grounds for a claim, your best bet for recovering damages is to file a Financial Industry Regulatory Authority (FINRA) arbitration case against your brokerage firm who sold you the shares.

For over 30 years, SSEK Law Firm investment attorneys have been fighting for retail investors, senior investors, high-net-worth individual investors, and institutional investors. We have recovered many millions of dollars for our clients.

Investors who bought FS Energy and Power Fund shares at the $10/share price could be looking at losses of 80% or greater on their principal. Call (800) 259-9010 or contact SSEK Law Firm online.

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