FS Energy and Power Fund (FSEP) Downgraded

Did your broker/dealer or financial advisor recommend FS Energy and Power Fund (FSEP)?  Several investors have contacted Soreide Law Group after having experienced financial losses due to their investment in FSEP.
FS Energy and Power Fund, according to Bloomberg, operates as a closed-end management investment company. FSEP focuses on investment in debt and equity securities. In addition, FSEP invests in privately-held United States companies in the energy and power industry.
According to Moody's Investors Service (Moody's), FSEP corporate family and long-term senior secured debt ratings have been downgraded to Ba3 from Ba2. Following the downgrade, the ratings were placed on review for downgrade.
The downgrade of FSEP's ratings and state Moody’s reflects the heightened risk to FS Energy and Power Fund’s financial strength and performance. This is a result of the recent plunge in oil prices and Moody's view that oil prices will remain lower than previously expected in 2020. Oil prices have declined markedly to below $30/bbl. due to a drop in oil demand caused by the coronavirus and the lack of production cuts by OPEC.
According to Moody’s, FS Energy and Power Fund is more exposed to the oil price decline because it invests primarily in private US energy and power companies, with major exposure to exploration and production companies. Although FSEP has recently reduced its exposure to exploration and production companies, those investments accounted for 49% of their portfolio as of September of 2019. Moody's will assess the impact of depressed oil prices during the review of FSEP.
This downward trend for investors in the oil and gas industry can be devastating to those investors who thought they had low-risk and secure investments.  Investments such as FSEP carry a high degree of risk. These are sold as unregistered securities which have a problem with liquidity. It could be very difficult to find a buyer if the investor wishes to sell. Broker/dealers have an obligation to their clients to make clear the risk factor involved in products like FSEP.
As of September 2021, Soreide Law Group is representing clients against brokerage firms that sold them FS Energy and Power Fund. Recent sales of FS Energy in the secondary market have been between $1 and $2 leaving investors with a 90% loss even one year after the below post. Soreide Law has filed claims against LPL Financial, Cetera, Raymond James, Ameriprise and other firms for recommending FS Energy and Power.

Contact Soreide Law Group for help

If you’ve suffered losses due to your broker/dealer or financial advisor recommending investing in FS Energy and Power Fund (FSEP), contact Soreide Law Group and speak to a lawyer at no cost regarding the possible recovery of your investment losses through a FINRA arbitration at:  888-760-6552.
Soreide Law Group works on a contingency fee and represents our clients nationwide before FINRA.