Many of us have faced big losses with Energy 11 investments and feel unsure about what happened. It’s tough to see your savings take a hit. We looked into these issues and found that Energy 11 raised over $350 million from investors but later stopped distributions in March 2020.
In this blog, w break down why these Energy 11 loss happened and share steps you can take to try to recover your money. Keep reading if you want clear answers on what went wrong with your investment.
Key Takeaways
Table of Contents
- Energy 11 raised over $350 million from investors but stopped monthly distributions in March 2020, missing about $42 million in payments by September 2021 and owing $45 million as of September 2023.
- The unit value dropped more than 50 percent, going from $19-$20 at launch to just $7.23 by January 2021 due to falling oil prices and the COVID-19 downturn.
- Many investors claim David Lerner Associates failed to explain major risks or suitability, leading some to file FINRA arbitration for lost savings and unpaid distributions.
- Brokers faced charges like misrepresentation, unsuitable advice for conservative clients, and breach of fiduciary duty; one case forced David Lerner Associates to pay over $1 million in restitution.
- Investors can recover losses through FINRA arbitration if they act within six years; working with securities lawyers improves chances for compensation and legal support.
Key Issues Affecting Energy 11 Investments
We see several serious problems that have hit Energy 11 investments. These issues can lead to major financial losses and increased risk for investors.
Suspension of distributions in March 2020
Energy 11 stopped monthly distributions to its limited partners in March 2020. Over the next 21 months, missed payments piled up to about $42 million in unpaid distributions. Partners waited for their regular income, but no checks arrived.
This move left many of us concerned about our cash flow and ability to meet financial obligations.
As of September 30, 2021, Energy 11’s total liabilities stood at $44.48 million. The partnership needed around $79.5 million to cover both missed distributions and current debts. On top of this, we saw a requirement to pay down a loan balance by another $9 million.
These numbers show how the suspension impacted our investment and increased financial pressure on all partners involved.
Decline in unit value by over 50%
Unit values fell from $19 to $20 at launch, down to just $7.23 by January 2021. We saw a decline of over 50 percent during this period. This drop mainly came from falling oil prices and the economic downturn caused by the COVID-19 pandemic.
Asset value losses like these meant many investors faced steep financial loss.
Many claims targeted David Lerner Associates for failing to inform us about high investment risk and speculation in Energy 11. As unit prices dropped, a wave of investor protection concerns emerged.
By September 2023, unpaid distributions totaled around $45 million. Many of us learned that market decline exposed gaps in informational disclosure about asset value risks.
We were never told our investments could lose more than half their value so quickly.
$45 million in unpaid distributions as of September 2023
After the steep decline in unit value, investors faced another major setback. By September 2023, Energy 11 owed us $45 million in unpaid distributions. This unpaid amount equals $2.39 for each common unit we hold.
Distributions stopped from March 2020 until November 2021, creating a long gap without payments to investors. Our estimated value per common unit also dropped to $7.23 on January 25, 2021.
These missed payments and the drop in equity have raised serious concerns about our investments’ security and future returns. We need clear financial reporting and honest communication from investor relations as these issues impact all of us who own securities with Energy 11.
Rising debt and stagnant assets
The $45 million in unpaid distributions as of September 2023 highlights a growing financial strain. Our total liabilities have reached $20.38 million, and with the unpaid distributions, the combined burden stands at $65.38 million as of June 30, 2023.
We have watched our assets remain stagnant while our debt rises. Asset growth has stalled since Energy 11 suspended distributions to limited partners in March 2020 and only resumed payments at a lower rate in late 2021.
Meanwhile, market value dropped sharply from an initial offering price of $19 or $20 per unit to just $7.23 by December 31, 2020. These issues show that investments like Energy 11 are speculative and illiquid, best suited for those with very high risk tolerance who understand poor financial performance can lead to ongoing concerns about future returns.
Common Investor Complaints
Many investors raise concerns about unfair practices and seek clear answer’s read on to find out more.
Unsuitability of investment recommendations
Recommending Energy 11 to conservative investors raised serious concerns about suitability. We saw unit values drop by over 50 percent, with $45 million in unpaid distributions as of September 2023.
Brokers should have assessed each individual’s risk tolerance and financial goals before suggesting this investment. The project’s heavy dependence on unstable energy prices meant high market volatility and a significant chance of loss.
Our portfolios often suffered from overconcentration when brokers placed too much value in Energy 11 or similar products like Energy 12. This ignored basic principles of asset allocation and diversification, exposing us to unnecessary risks.
Financial advisors failed to follow regulatory compliance rules that protect investor interests, especially for those seeking lower-risk options. These complaints led several investors to file consumer complaints and pursue FINRA arbitration against firms accused of ignoring proper risk assessment standards.
Misrepresentation and omission of key information
Just as unsuitable investment recommendations raise concern, we must also watch for misrepresentation and omission of key information. Many investors report that their brokers downplayed or failed to disclose the actual risks tied to Energy 11.
David Lerner Associates promoted Energy 11 and Energy Resources 12 to conservative and inexperienced investors, yet did not always provide clear details about volatility or risk.
Numerous FINRA arbitration claims show a pattern of misleading information. As of September 2023, unpaid distributions from Energy 11 reached $45 million while unit values dropped by over 50 percent since March 2020.
We have seen many complaints that financial advisors pushed these investments because they earned high commissions instead of focusing on investor protection or suitability requirements set by regulation.
Deception like this harms transparency and trust in our investments.
Breach of fiduciary duty by brokers
Many investors in Energy 11 report a breach of fiduciary duty by their brokers. Several clients claim that David Lerner Associates recommended unsuitable investments, ignoring our risk tolerance and financial profiles.
We see allegations of misrepresentation about both the suitability and expected performance of these investments. As investors, we suffered significant financial losses after relying on advice that did not match our needs or goals.
Concerns grow over conflicts of interest when firms like David Lerner Associates receive substantial commissions for selling specific products. A broker’s fiduciary responsibility includes acting in our best interests, providing honest information, and avoiding conflicts that hurt us as clients.
We expect ethical standards but find evidence some brokers ignored key risks or omitted facts related to investment suitability. Many complaints show how lack of proper risk assessment led to poor outcomes for risk-averse individuals.
In many cases, such investor claims have led to regulatory actions and arbitration filings against offending brokers; actual case examples can offer more insight into these issues.
Specific Examples of Investor Claims
Many investors have brought formal claims against brokers over Energy 11 losses. Their stories highlight real financial harm and the demand for justice.
FINRA arbitration cases against brokers
FINRA arbitration offers investors a path to seek restitution from brokers. We have seen multiple claims related to Energy 11 losses.
- David Lerner Associates agreed to pay over $1 million in restitution to more than 200 investors.
- Investors file FINRA arbitration claims to recover losses tied to unsuitable recommendations.
- Advisors face legal action when they fail industry suitability standards.
- Some claims focus on misrepresentation and omission of key information by advisors.
- Disciplinary actions cover failures such as negligent supervision and other breaches of fiduciary duty.
- Investors often name specific damages in their arbitration cases, seeking compensation for lost value and unpaid distributions.
- Legal representation improves our chances of recovering investment losses through arbitration proceedings.
Notable complaints and damages sought
Following our review of arbitration cases against brokers, we now focus on the notable complaints and damages sought by investors. Many shareholders have pushed claims for significant losses due to alleged misconduct and regulatory violations.
- An elderly couple filed a claim seeking up to $1 million in damages after heavy losses in Energy 11, Energy 12, and SOAEX.
- The claim alleges that brokers made recommendations unsuitable for conservative or senior investors, violating suitability standards.
- Investors reported misrepresentation and omission of important risk information, leading to poor risk assessment.
- Complaints detail financial negligence by brokers who failed to provide adequate warnings about rising debt and stagnant assets.
- Claimants charge that some firms breached their fiduciary duty by not acting in the best interests of investors.
- Plaintiffs also cite investment fraud due to misleading statements about the safety of Energy 11 investments.
- Several actions highlight how David Lerner Associates faced past regulatory sanctions tied to similar sales practices.
- Damages recovery through arbitration claims has become an essential path for those seeking investor protection from inappropriate investment advice and conduct.
- Arbitration claims include requests for compensation related to unpaid distributions, which reached $45 million as of September 2023.
- Senior investors emphasize the impact on their retirement savings, seeking justice and improved regulatory compliance within securities markets.
Recovery Options for Investors
We can take action to address our investment losses. We should review available claims and explore possible ways to recover funds.
Filing FINRA arbitration claims
Filing FINRA arbitration claims gives us a structured way to recover our investment losses. We must submit all claims within six years of the event, as stated in Code of Arbitration Procedure Rules 12206 and 13206.
Using the Dispute Resolution Portal, we upload documents, receive notifications, and get assigned a case number for tracking.
The process allows us to request extensions for filing a Statement of Answer but only with claimant consent or valid cause. Arbitration panels decide liability and assess damages if they find wrongdoing by brokers or firms.
This path protects our investor rights through formal claim submission and case management steps. In situations like these, consulting securities arbitration lawyers can help ensure proper handling of legal procedures and damage assessment on our behalf.
Consulting securities arbitration lawyers
We consider working with securities arbitration lawyers a key step to protect our investor rights. These legal professionals can help us evaluate claims about financial advisor malpractice or misrepresentation.
Many of them work on a contingency fee basis, so we do not pay unless we recover losses. Some firms offer free consultations and focus on investment recovery through the FINRA arbitration process.
Securities litigation experts know how to handle financial disputes like unpaid distributions or falling unit values. For example, Energy 11 investors saw over $45 million in unpaid distributions as of September 2023 and unit values fell by more than 50 percent after March 2020.
Legal representation helps us seek damages for such losses; these lawyers guide us through each part of dispute resolution, from collecting evidence to negotiating settlements or going before an arbitration panel if needed.
Conclusion
Energy 11 losses remind us to check every detail before we invest. We must understand the risks of volatile investments like oil and gas funds. Many investors faced big losses from unpaid distributions and falling unit values.
If we feel misled, we can seek compensation through FINRA arbitration claims. Staying informed helps protect our financial future in risky markets.
