NAPLES, Fla., Aug. 1, 2016 /PRNewswire/ -- Vernon Litigation was recently granted the right to pursue investor claims on an expedited basis by the Financial Industry Regulatory Authority (FINRA). In this case, Vernon Litigation represents a retiree who had his retirement accounts and the bulk of his assets with Merrill Lynch, Pierce, Fenner & Smith Inc.
The case involves a significant investment in two oil and gas Master Limited Partnerships: EV Energy Partners and Memorial Production Partners. The Claim alleges that the two investments were pitched as an income-generating investment suitable for the retiree client. In reality, the Claim states the Partnerships were extremely volatile investments that had the risk of losing the entire principal as well as incurring significant tax consequences. Both Partnerships declined sharply in value beginning in 2015.
The level of harm suffered by the investor in this case is significant. Specifically, the value of the EV Energy Partners and Memorial Production Partners investments dropped from around $2 million to about $354,000, according to the claim. This represents losses in excess of $1.6 million.
In addition to recommending high-risk volatile investments, the Claim also alleges that Merrill Lynch recommended that the investor take a collateralized loan and use the loan to pay off the investor's mortgage (allegedly offering a better interest rate). Unfortunately, the Claim indicates that this loan caused a domino effect once the Master Limited Partnerships declined in value because Merrill Lynch called the loan and liquidated a significant portion of the investor's portfolio in order to pay down the loan (which would not have happened had the investor kept his original home mortgage).
The FINRA Claim filed by the Vernon Litigation Group alleges that the firm failed to mention that a material decline in the price of oil and/or gas would force the partnerships to restructure, which would result in heavy losses for investors. In this case, the investor's Claim alleges violations to the Florida Securities Act, breach of Fiduciary Duty, fraud, misrepresentations and breach of Industry Rules.
As part of its investigation in this and other cases, Vernon Litigation is studying the widespread practice of major investment firms promoting the lending of money to their own client base while promoting the sale of highly leveraged MLPs to those same clients. This combination creates a dangerous mixture of debt that can literally destroy a client's net worth while generating significant fees for the Wall Street firms engaging in this practice. In Vernon Litigation's opinion, it is outrageous for brokerage firms to use MLPs as a bond substitute as outlined in its detailed analysis of MLPs currently available on the internet.
The Vernon Litigation Group has decades of combined experience in dealing with all kinds of financial and investment claims on behalf of investors throughout the United States and abroad. The lawyers at Vernon Litigation Group have collectively recovered hundreds of millions of dollars on behalf of our clients, and we stand ready to assist investors in any kind of financial harm or wrongdoing. Please contact us to discuss your rights if you have suffered significant losses in MLPs or other energy investments recommended by your investment professional. Our initial consultation regarding your possibility of recovery of your losses is confidential and free. For more information, visit our website at vernonlitigation.com or contact Vernon Litigation Group by phone at 1-877-649-5394 or by e-mail at firstname.lastname@example.org to speak with a representative at Vernon Litigation Group.
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SOURCE Vernon Litigation Group