Erez Law is currently investigating Wunderlich Securities, Inc. financial advisor Ralph E. DeRose (CRD# 721488) regarding over concentration in high risk oil and gas investments. DeRose has been registered with Wunderlich Securities, Inc. in Beachwood, Ohio since 2010.
In April 2017, a FINRA arbitration panel held Wunderlich Securities, Inc. and DeRose liable for more than $1 million in damages related to overconcentrated oil and gas investments in the high risk energy sector.
According to the Nasdaq list of offerings history, Wunderlich Securities has served as an underwriter for the following energy companies:
- Sandridge Energy
- Breitburn Energy Partners
- Linn Energy
- Atlas Resource Partners
- Swift Energy
SandRidge Energy is an oil and natural gas exploration and production company headquartered in Oklahoma City, Oklahoma. Due to high debt and low commodity prices, the company amassed more debt than they would sustain. In May 2016, the company filed for bankruptcy, and in October 2016 they emerged from bankruptcy, eliminating $3.7 billion in debt from its reorganization and opening up $500 million in liquidity.
Breitburn Energy Partners experienced a decline in commodity prices beginning in 2014 and the company’s debt burden became unsustainable. Breitburn filed for Chapter 11 bankruptcy to restructure its balance sheet in May 2016 and eliminated $5.8 billion in debt, according to a statement on the company’s website
Linn Energy, LLC was an oil and natural gas company headquartered in Houston, Texas. When global crude oil prices dropped, Linn Energy accrued significant debt. According to a statement on their website, Linn Energy, LLC filed a voluntary petition for restructuring under Chapter 11 of the Bankruptcy Code in May 2016 to alleviate itself of $5 billion in debt. In February 2017, LINN Energy, Inc. was formed as the reorganized successor to Linn Energy, LLC.
Atlas Resource Partners, L.P. was an exploration and production company. Atlas Resources Partners filed for bankruptcy in July 2016 and executed a restructuring plan that it has said will cut debt by about $900 million, reduce interest expense by $80 million, and to alleviate itself of $1.36 billion in debt. Atlas Resource Partners emerged from bankruptcy protection in September 2016 protection with a new name, Titan Energy LLC.
Swift Energy Co. is an independent oil and natural gas company that filed for Chapter 11 bankruptcy in October 2016, eliminating $1.23 billion in debt.
These and many other oil and gas companies have experienced price fluctuations over the past few years, which has put financial stress on the oil and gas industry. 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. While financial advisers can effectively coax clients into lucrative high risk, high yield investments in the oil and gas industry, some fail to fully inform their clients of the inherent risks.
DeRose has been the subject of three customer complaints between 2002 and 2016, one of which was denied, according to his CRD report:
- March 2016. “Clients allege poor performance and that FA did not follow instructions regarding liquidation of securities. Allegation period 10/2010 – 9/2015.” The client sought $3,000,000 in damages and the client was awarded $1,044,782.
- February 2002. “**negligence, failure to supervise (SP), suitability, breach of fiduciary duty** Claimant alleged that Roney and Mr. DeRose were negligent in their choices and handling of his accounts due to lack of diversification and the purchasing of speculative, small-cap stocks. Claimant further alleged an inadvisable concentration of Quigley stock in both of his accounts. As a result, claimant (SP) sought a money judgment in excess of $100,000.” The client sought $100,000 in damages and the case was settled for $9,000.
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, Wunderlich Securities, Inc. may be liable for investment or other losses suffered by DeRose’s customers.
Erez Law represents investors in the United States for claims against Wunderlich Securities, Inc. financial advisor Ralph E. DeRose, who is alleged to recommend an investment portfolio overconcentrated in high risk oil and gas investments. If you were a client of Wunderlich Securities, Inc. financial advisor Ralph E. DeRose or another firm, 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.
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