Boca Raton (Globe Newswire) – April 7, 2016 – The Securities Arbitration Law Firm of Klayman & Toskes, P.A. (“K&T”), www.nasd-law.com, announces that it is conducting an investigation into potential Financial Industry Regulatory Authority (FINRA) sales practice violations by brokerage firms for solicited investments in Franklin Square Energy and Power Fund (“FSEP”), a non-traded Business Development Company (“BDC”). FSEP assets, with assets in excess of $3.6 billion, are invested primarily in senior secured loans made to private companies focused in oil industry infrastructure for drilling and exploration. FSEP investors have experienced a decline in the value of the non-traded BDC Net Asset Value (NAV) along with the decline in the price of oil. According to K&T, the scope of the investigation includes whether brokerage firms made suitable recommendations related to FSEP and whether adequate disclosure was made concerning the syndication costs and risks of non-traded BDC concentrated in the energy sector.
A new regulatory notice, FINRA Notice to Members 15-02, effective April11, 2016 instructs brokerage firms to provide greater disclosure concerning BDCs, such as FSEP on customer account statements. Securities attorney Lawrence Klayman, Esq. comments on the regulatory notice, ”Investors in Franklin Square’s Energy and Power Fund will now receive more accurate information disclosed on account statements, including deductions of 10% for distribution costs and changes in the value of the loan portfolio concentrated in the energy sector.” Mr. Klayman asserts, “Our investigation is to determine whether financial advisors failed to adequately disclose the risks related to concentration in the energy sector and the effects of syndication costs on the valuation of this BDC.”
FINRA sales practice rules related to potential violations may include misrepresentations and omissions of material facts, conflicts of interest, unsuitable investment advice, securities concentration, or failure to supervise its financial advisors. Our investigation relates to brokerage firms and its financial advisors’ recommended investments in Franklin Square Energy and Power Fund for customer accounts.
About Klayman & Toskes, P.A.
K&T is a leading national securities law firm which practices exclusively in the field of securities arbitration and litigation, on behalf of retail and institutional investors, such as non-profit organizations, unions, public and multi-employer pension funds, in large and complex securities matters. K&T has office locations in California, Florida, New York and Puerto Rico. If you wish to discuss this investigation or have knowledge of brokerage firm sales practices related to Franklin Square Energy and Power Fund can contact us, or call Steven D. Toskes, Esq. at 888-997-9956.