SHOYX lawsuit investigation

American Beacon SiM High Yield Opportunities Fund (SHOYX) Investigation

The Haselkorn & Thibaut, P.A. law firm is a nationwide investment fraud law firm (www.investmentfraudlawyers.com) investigating potential sales practice violations by financial advisors who were recommending energy sector-related investments to lead street investors.   Looking back, the SHOYX price was generally over $9.00 since mid-2016 and through most of 2017, 2018, and into 2019. Except for volatility in the 4th quarter of 2018, this was reasonably consistent even through the remainder of 2019. At the beginning of 2020, SHOYX remained over $9.00 even into early March 2020. More recently, SHOYX is trading under $8.00.  

SHOYX is the $1.3 billion American Beacon SiM High Yield Opportunities Fund (Symbol: SHOYX), and it is reported by Investing.com to be among the worst ten funds with the highest exposure to energy debt. The range of exposure among the funds was 12% to 14% of assets.

One of SHOYX’s most significant energy holdings (as of late February 2020) was debt issued by California Resources Corporation (Symbol: CRC). The company, which was spun off from Occidental Petroleum (Symbol: OXY) in 2014, has struggled with the debt load it inherited from its former parent. 

California Resources Corporation (Symbol: CRC) operates as an oil and natural gas exploration and production company in the State of California. The company sells crude oil, natural gas, and natural gas liquids to marketers, California refineries, and other purchasers that have access to transportation and storage facilities. It holds interests in approximately 2.2 million net acres of mineral acreage. It also engages in the generation and sale of electricity to the grid and utility customers. The company was founded in 2014 and is based in Los Angeles, California.

CRC’s 2022 bonds held by SHOYX had dropped to 23 cents on the dollar by the end of February 2020. The SHOYX value of the CRC bonds appears to be approximately $4.4 million, from par value of nearly $20 million. According to Investing.com, on April 2, 2020, the market speculation that CRC might file for bankruptcy has made those bonds almost worthless, trading at pennies on the dollar. That came despite the company’s statement last month that it had significant operating flexibility and was “considering all options” to work through the downturn. 

California Resources Corporation (Symbol: CRC) stock price was generally over $14.00 from the first quarter of 2016 through 2017, 2018and into 2019. The price was over $36.00 at one point. By early 2020 the price was still over $10.00 but has recently been trading under $1.00. Please note the pricing above refers to the CRC 2022 bond issue, and this pricing refers to CRC’s stock price.  

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SHOYX, CRC, and OXY Investigations

The Haselkorn & Thibaut, P.A. law firm is a nationwide investment fraud law firm (www.investmentfraudlawyers.com) investigating potential sales practice violations by financial advisors who were recommending SHOYX, CRC, and OXY along with many similar energy sector investments sold to investors.  

For investors, this is a particularly severe blow as these are the types of investments that were often recommended by financial advisors who did not disclose the potential level of risk that was realized and investors were unaware of the real level of risk to which their investment principal was exposed as it was never properly disclosed (if it was ever disclosed at all) by their financial advisors.

Although Financial advisors may claim that these were unforeseen market events, the reality is that these are similar risks to those experienced in the 2008-2009 financial crisis. These potential risks were material risks that should have been adequately disclosed to clients before recommending these investments individually or as part of a portfolio or investment strategy. 

 Oil, gas, and energy linked investments have been promoted in recent years as an attractive source of dividend income in an otherwise low-interest-rate environment. It’s important to note that in making such recommendations to investors, a fair and balanced disclosure of material risks is required by the laws, rules, and regulations in the securities industry. In addition to the risks experienced in 2008-2009 referenced above, there was once again in 2014-2015 volatility in the energy industry and a precipitous decline in the price of oil at that time, the result of which saw the value of many investments MLPs (as well as high-yield or junk bonds, stocks, and other securities) tied to the energy industry also significantly decline in value. The question now is whether there were any of these past events and risks, including the history of volatility, loss, bankruptcies, part of the financial advisor’s pitch in recommending these securities? 

Probably not, in many cases, those discussions are non-existent, and the pitch is limited only to the income stream. 

Many of these investments were sold by financial advisors without proper risk disclosures, as these are considered risky securities. In cases where these were recommended to retirees or similar conservative income-seeking investors there is the potential for sales practice abuse as a result of misrepresentations, but more often as a result of omissions of material fact, or due to a lack of proper supervision.

Investors Seeking to Recover Losses  

For some investors, a private FINRA arbitration customer dispute enables them to bring a claim and potentially recoup their investment losses. These customer disputes typically involve only paper discovery and no depositions, and they are generally faster and more efficient compared to traditional court litigation, as they provide a private forum to resolve disputes more quickly and efficiently. 

About Haselkorn & Thibaut, P.A.

Haselkorn and Thibaut, P.A. is a nationwide law firm specializing in handling investment fraud and securities arbitration cases. The law firm has offices in Palm Beach, Florida, on Park Avenue in New York, as well as in Phoenix, Arizona, and Cary, North Carolina. The two founding partners have nearly 45 years of legal experience. 

Haselkorn & Thibaut, P.A. has filed numerous (private arbitration) customer disputes with the Financial Industry Regulatory Association (FINRA) for customers who suffered investment losses relating to issues similar to those matters mentioned above. There are typically no depositions involved, and those cases are typically handled on contingency with no recovery, no fee terms. Experienced attorneys at Haselkorn & Thibaut, P.A., are available for a free consultation as a public service. Call today for more information at 1-800-856-3352 or visit our website and email us from there at www.investmentfraudlawyers.com.   

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