Gregory B. Simon Law, LLC is investigating investor claims related to purchases of FS Energy and Power Fund (“FSEP”). FSEP is a non-traded business development company (“BDC”) that invests primarily in the debt of private U.S. energy and power companies. FSEP closed to new investors in November 2016. FSEP suspended its regular cash distributions to shareholders after March 1, 2020 and further decided to suspend its share repurchase program for an indefinite period of time. Non-traded BDCs are not listed on a national securities exchange and are not publicly traded. Accordingly, there is a lack of liquidity, meaning they cannot be easily sold in the market. Many investors who purchased non-traded BDCs may have to hold these investments for years without the ability to sell shares even after distributions have dwindled or ceased altogether. Recent pricing suggests that FSEP investors looking to sell shares on a thinly traded secondary market may only do so at disadvantageous pricing of around $1.00 - $1.50 per share.
Additionally, BDCs like FSEP typically charge very high upfront fees to compensate a firm or individual selling the investment as well as high transaction costs. These excessive fees and costs substantially lower the value and return of the investment.
Before recommending an investment in a non-traded BDC, a brokerage firm and its financial advisors have a duty to adequately disclose the risks involved in the investments and to perform the necessary due diligence to determine whether the investment is suitable for each individual investor.
If your broker recommended the purchase of FS Energy and Power Fund in your brokerage account, you may be able to recoup your losses under applicable state and/or federal law. Please contact us for a free confidential consultation.
Gregory B. Simon Law, LLC is a national securities law firm that provides legal services to investors and financial advisors on a wide range of financial industry matters. For more information on the firm, please visit https://www.gregsimonlaw.com.