Investor Lawyers Blog
Law Office of Christopher J. Gray wishes to alert investors to the possibility that recommendations of Reef Securities, Inc. (Reef) by broker-dealers may be unsuitable, depending on the individual characteristics of investors and whether the broker had a reasonable basis for the recommendation.
Reef, a Texas based company, is an independent oil and gas company that explores for crude oil, natural gas and natural gas liquids in the U.S. Reef and other firms have marketed their funds to investors as a way to profit from the U.S. shale oil and fracking boom. These companies issue limited partnerships and other private, non-traded investments that promise to drill for oil and gas and pay investors the profits that will result. Even in the best of times, such investments have substantial drawbacks including illiquidity (the fact that they can’t be easily re-sold after an investor purchases them), very high commissions, sales costs, and management fees, and risk that they investor may lose his initial investment. Due to these risks investors often lose money while issuers make handsome profits.
Broker recommendations in Reef may be inappropriate for unsophisticated investors. Oil and gas investments can be complex and overly risky for investors seeking stable long term investments
Some of the Reef investments include:
* Reef 2015 Oil & Gas Opportunity Fund
* Reef 2015 Income Fund
* Reef Bakken Bear Cat Drilling Fund
* Reef 2012-A Private Drilling Fund
* Reef 2011 Private Drilling Fund
* Reef 2010 Drilling Fund
* Reef 2009 Drilling Fund
* Reef 2007-2009 Drilling Program
* Reef Oil & Gas Drilling & Income Fund
* Reef Oil & Gas Income & Development Fund III
* Reef Oil & Gas Income & Development Fund IV
The high costs associated with oil and gas private placements, often 30-35% of the investors original investment, create a substantial risk that investors will lose money, even in good times. How the investments will fare in today’s low oil price climate is open to question, but the likelihood appears to be that investor losses will only increase.
When a broker recommends that a client purchase or sell a security, the broker must have a reasonable basis for believing that the recommendation is suitable for the investor. In making this assessment, a broker must consider the investors income and net worth, investment objectives, risk tolerance, and other security holdings.
If you believe you have been the victim of stockbroker misconduct, you may wish to consult an attorney to find out more about your legal rights and options. Investors may contact a securities arbitration attorney at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or newcases@investorlawyers.net for a no-cost, confidential consultation.