Investor Lawyers Blog
Investors in the Triloma EIG Energy Income Fund (the “Triloma Perpetual Fund”) and the Triloma EIG Energy Income Fund – Term I (the “Triloma Term Fund”) (collectively, the “Triloma Funds”) may be able to recover their investment losses through FINRA arbitration, in the event that the investment was recommended by a financial advisor who lacked a reasonable basis for the recommendation, or if the nature of the investment was misrepresented by the financial advisor. The Triloma Funds are publicly registered, unlisted closed-end management investment companies under the Investment Company Act of 1940 (’40 Act) that focus on investing in privately originated energy company and energy project debt. The Triloma Funds are managed by Triloma Energy Advisors and EIG Credit Management Company.
On March 26, 2018, the Board of Trustees of the Funds approved a plan of liquidation of each respective fund, authorizing the liquidation and dissolution of the Triloma Funds. Pursuant to the liquidation plan, the Triloma Funds will not engage in any further business activities, except for the purpose of winding down operations and business affairs. Further, in accordance with the plan of liquidation, the Boards agreed to terminate each funds’ respective distribution reinvestment plan and previously approved monthly distributions.
Under the plan of liquidation, the Triloma Funds have agreed to sell their originated investments to a third-party and will use a portion of the proceeds to pay all of their outstanding debts, claims and obligations. Triloma Funds’ shareholders can expect to receive an initial cash liquidating distribution on or about May 15, 2018. To the extent that any assets might remain after such liquidation payments and satisfaction of final expenses, there will be a second liquidating distribution above a threshold of $100 per shareholder made on or before June 30, 2018.
Investing in unlisted or non-traded securities — including non-publicly traded real estate investment trusts (“REITs”), business development companies (“BDCs”), and energy sector investment vehicles including closed-end management companies such as the Triloma Funds — often is a risky proposition. Such investments are typically complex in their structure, often charge high fees and commissions payable to the fund sponsor and broker recommending the investment (as high as 15% of the initial capital outlay in some instances), and are illiquid.
Moreover, investing in the oil and gas sector carries with it unique risks, and many oil and gas investments may not be suitable for the average, retail investor. When a broker recommends an oil and gas investment to a client, the brokerage firm and broker first have a duty to conduct due diligence on the investment. In addition, the financial advisor has a duty to determine if the investment is suitable in light of the investor’s profile and stated investment objectives.
Attorneys at Law Office of Christopher J. Gray, P.C. have substantial experience representing clients in cases involving non-conventional investments and oil and gas-related securities. Investors may contact a securities arbitration attorney at Law Office of Christopher J. Gray, P.C. (866) 966-9598 or newcases@investorlawyers.net for a no-cost, confidential consultation.