Did you lose money investing with J.J.B. Hilliard, W.L. Lyons, LLC financial advisor John Gordinier II (CRD# 2363965) in the high risk oil and gas sector? Gordinier has been registered with J.J.B. Hilliard, W.L. Lyons, LLC in Louisville, Kentucky since 1993.
In January 2018, a former client of Gordinier and J.J.B. Hilliard, W.L. Lyons, LLC filed a FINRA arbitration alleging, “Claimants allege negligence, breach of fiduciary duty, negligent supervision, and breach of contract in relation to the suitability of certain energy investments.” The customer is seeking $500,000 and the case is currently pending.
It is alleged that a retiree with no investment experience relied on Gordinier for his investment expertise. The retiree was living off of social security income and had the investment objective of growth and income. Despite her investment objective, Gordinier over-concentrated her portfolio, with 99% of investments in high risk and unsuitable oil and gas investments tied to the energy sector. These investments included:
- Linn Energy
- Linnco
- Vanguard Natural Resources
- Breitburn Energy
- LRR Energy
In the same customer complaint, another customer in her 50s had an investment objective of income with occasional speculation. Gordinier over-concentrated her portfolio in high risk energy sector investments, causing her to suffer $60,000 in losses, which represented her entire retirement savings. The customer’s accounts were invested in the following investments:
- Linnco
- Breitburn Energy
- LRR Energy
- Vanguard Natural Resources
The final claimant in the lawsuit, a married couple who are still employed, also were the victims of over-concentration in the high risk oil and gas sector by Gordinier. Even when the customers voiced concerns over plummeting values, Gordinier persuaded the customers not to sell and to hold their stocks.
Over the past few years, oil prices have significantly declined. A supply glut in 2014 and 2015 led to some of the lowest prices the market has seen in recent years. In turn, securities values also dropped, including the values of Linn Energy and many others. The volatile energy sector experienced significant turmoil, and many energy companies were negatively impacted when global crude oil prices fell below $40 per barrel at the end of 2015. This was the lowest level since early 2009, as supply was in excess of global demand. Oil and gas companies experienced a spike in bankruptcies, which have left many investors reeling.
Linn Energy was an oil and natural gas company headquartered in Houston, Texas. When global crude oil prices dropped, Linn Energy accrued significant debt. According to the company, Linn Energy, LLC filed a voluntary petition for restructuring under Chapter 11 of the Bankruptcy Code in May 2016 to alleviate itself of $6.06 billion in debt. In February 2017, LINN Energy, Inc. was formed as the reorganized successor to Linn Energy, LLC. Additionally, Linn Energy issued publicly traded stocks. LINN Energy, LLC (LINE) and LinnCo, LLC (LNCO) were delisted from The NASDAQ stock market in May 2016 following bankruptcy proceedings, according to a release on the company’s website. As of March 2017, LINN Energy, LLC (LINE) currently trades for $.07.
Breitburn Energy Partners is an independent oil and gas master limited partnership focused on the development and production of oil and gas properties throughout the United States. The decline in commodity prices beginning in 2014 placed stress on the industry as a whole, and the company’s debt burden became unsustainable. Breitburn has since filed for Chapter 11 of the U.S. Bankruptcy Code to restructure its balance sheet in May 2016 and eliminated $5.8 billion in debt.
The distribution value of Vanguard Natural Resources kept steady in 2013 at $2.47 and then $2.52 in 2014, however it took a nosedive in 2015 dropping to just $1.24, according to the company website. In 2016, the value was at $.09 and as of March 2017 it currently sits at $.08. As of February 2017, Vanguard Natural Resources filed for relief under Chapter 11 of the U.S. Bankruptcy Code, and has entered into a restructuring agreement, according to a statement on their website.
LRR Energy, L.P. operates, acquires, exploits, and develops producing oil and natural gas properties in North America. It holds interests in various properties located in the Permian Basin region in west Texas and southeast New Mexico; the Mid-Continent region in Oklahoma and east Texas; and the Gulf Coast region in Texas. As of October 5, 2015, LRR Energy, L.P. operates as a subsidiary of Vanguard Natural Resources.
Investments in stocks and bonds in the volatile energy sector may not be suitable for investors looking to generate income or maintain principal. Pursuant to FINRA Rules, member firms are responsible for supervising a broker’s activities during the time the broker is registered with the firm. Therefore, brokerage firms across the country may be liable for investment or other losses suffered by its brokers customers.
Erez Law represents investors in the United States for claims against brokers and brokerage firms for wrongdoing. If and have experienced investment losses, please call us at 888-840-1571 or complete our contact form for a free consultation. Erez Law is a nationally recognized law firm representing individuals, trusts, corporations and institutions in claims against brokerage firms, banks and insurance companies on a contingency fee basis.
"*" indicates required fields
