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Sanchez Energy is a Houston-based oil company that was offered as an alternative investment product.
The company was started in 2013 through a Form D private placement. Last week, the company filed for Chapter 11 bankruptcy, listing $2.8 billion in debt, along with $2.1 billion in assets, in the court records.
Unfortunately, Sanchez Energy’s bankruptcy may result in losses for creditors and investors with the fund. The energy market is volatile and inconsistent, based in part on the recently-declining price of oil.
This volatility compounds with the unregistered nature of alternative investment products like those offered in Sanchez Energy securities, making investments in them inherently high-risk.
Many broker-dealers may prefer offering alternative investment products because they can result in higher commissions. Investors may not always fully understand the risk of making these investments.
Under FINRA Rules, member firms are responsible for supervising their brokers and may be liable for misconduct. Investors who believe they were made unsuitable recommendations may be able to recover some or all of their investment through FINRA arbitration.
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If brokerage firms sold unsuitable, risky private placements to investors, they could potentially be held liable for any resulting financial losses. At Sonn Law Group, we have extensive experience representing investors in securities lawsuits and FINRA arbitration cases. If you sustained large investment losses, you may be eligible to recover monetary damages. For a free consultation, please contact our law office today.
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