Did you suffer investment losses in Viper Energy Partners LP MLP (VNOM)? Viper owns and acquires oil and natural gas properties in North America. As of December 31, 2019, it had mineral interests in the Permian Basin and Eagle Ford Shale with estimated proven oil and natural gas reserves. The company was founded in 2013 and is based in Midland, Texas. Viper Energy Partners LP (VNOM) is a subsidiary of Diamondback Energy, Inc.
If your financial advisor recommended that you invest in Viper Energy Partners L.P. (VNOM) and you suffered investment losses, you should contact an experienced investment fraud lawyer and investigate these issues in more detail. In September 2018, VNOM was trading over $40.00/share, and as recently as February 2020, VNOM was trading over $20.00/share, while most recently falling below $6.50/share.
What is Viper Energy Partners LP MLP (VNOM)?
Viper Energy Partners L.P. is a Master Limited Partnership (MLP). An MLP is a particular type of limited partnership that is publicly traded. To be classified as an MLP, the partnership must receive a large percentage of its cash flow from a “qualifying source” – such as real estate, natural resources, or commodities. MLPs don’t pay corporate income tax and are required by law to draw at least 90 percent of their revenue from natural resources such as oil and gas. Unlike real estate investment trusts (REITs), an MLP is not obligated to distribute all available cash. In most MLPs, the manager retains the discretion to determine how much cash to distribute to shareholders.
Problems With MLPs like VNOM
MLP’s are generally considered extremely complex and risky investment products. They are not suitable investment products for all investors.
Unfortunately, many firms and financial advisors know that investor clients in an otherwise low-interest-rate environment might be attracted to the comparatively higher yield from an energy MLP investment. What may not be explained to the investor client is the relative volatility of the energy industry and the fact that these higher yields often come with some more significant risks that are not fully or entirely disclosed. Many MLPs with attractive yields are burdened by high percentages of debt. That risk, along with the volatility level of the investment, would off-set the superficially attractive return for most investors who are getting proper investment advice.
The risks associated with investments related to the energy industry should have also been reviewed, analyzed, and explained to the investor client.
Was there any discussion regarding the impact of climate change risks, the rapid changes the industry has been experiencing, the impact OPEC or other market players could have, regulatory risks, changes to regulation, changes in tariffs or trade agreements, or the potential exposure this industry has with respect to catastrophic type events?
Financial Advisor Fraud Concerning VNOM
What specific risks were discussed at the time of the recommendation, or was it merely touting an attractive yield?
Broker-dealer firms and financial advisors that sell MLPs and similar investment products to retail investors are also required to perform adequate due diligence on the investments at the firm level and the individual financial advisor level before recommending the investment product to any retail investor customer. Were interest rate risks, potential secondary stock offering plans, and commodity price risk all reviewed and analyzed by the firm and by the financial advisor?
Were these risks disclosed to the investor client in a fair and balanced manner? In part, the purpose of the independent due diligence efforts is to evaluate whether the investments are suitable for certain investors based on their age, net worth, investment experience, investment objectives, and surrounding circumstances. With the investigation in these types of matters, it is often determined that the due diligence effort at the firm level and/or the financial advisor level was negligent or inadequate.
Haselkorn & Thibaut, P.A. is investigating potential securities fraud claims involving broker-dealers who may have unsuitably recommended MLPs such as Viper Energy Partners LP to investors.
Call now for a free consultation with an investment fraud lawyer 1-800-856-3352!
Seek Compensation for VNOM Losses
If you are an investor that purchased MLPs based on a negligent due diligence effort by the firm or the financial advisor that recommended the investment to you and you have incurred (realized or unrealized) losses, you should consider your potential options for recovering your investment losses.
At least one option for some investors includes a Financial Regulatory Authority (FINRA) customer dispute. The customer dispute process at FINRA is private and quicker and more efficient than traditional court litigation. Also, there are typically no depositions, as it is almost entirely paper-based discovery. You should contact experienced attorneys who might be able to assist you with these types of disputes.
Read More – Can I Sue My Financial Advisor?
About Haselkorn & Thibaut, P.A. – InvestmentFraudLawyers.com
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 in 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 like you who have suffered investment losses relating to issues similar to those matters mentioned above. There are typically no depositions involved, and those cases are usually handled on contingency with no recovery, no fee terms.
The 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.