FS Specialty Lending Fund Investor Alert

Soreide Law Group is reviewing potential investor claims tied to sales practice violations by securities brokers and financial advisors. One product now under scrutiny is the FS Specialty Lending Fund, previously called FS Energy & Power Fund. This investment has been restructured in recent years, but troubling reports suggest it has caused significant losses for many investors. Below is a summary of what you need to know about the fund and the possible rights of those affected.

What is FS Specialty Lending Fund?

The FS Specialty Lending Fund (FSSL) is a business development company, or BDC. These types of funds are designed to provide loans and capital to mid-sized businesses that may not have easy access to traditional financing. The fund was initially offered under the name FS Energy & Power Fund and has since transitioned toward becoming a registered closed-end fund. It has also moved closer to a public listing on the New York Stock Exchange under the ticker symbol FSSL. As part of this process, the fund carried out a one-for-six reverse stock split and announced plans to change certain management and fee structures.

Concerns About FS Specialty Lending Fund

Although the fund is reportedly working toward a public listing, its alleged track record has been described by some observers as raising concerns. It has been claimed that investors who originally purchased shares at $10 have allegedly seen the reported net asset value fall to around $3.30 at the end of 2024, with secondary market transactions said to be occurring at even lower prices, allegedly near $2.30. A reverse stock split may appear to result in a higher per-share price, but this is generally understood not to change overall performance and is sometimes suggested to reflect deeper financial challenges. Since launch, the fund has allegedly posted negative overall returns. In addition, it is often said that investors face the alleged problem of illiquidity, as shares in private or non-traded BDCs may be difficult to resell without taking a loss.

Sales Practice Violations

Products such as FSSL carry a high degree of risk, and there are concerns that some brokers may have failed to fully explain those risks to their clients. Potential sales practice violations include unsuitable investment recommendations, misstatements or omissions about risks, or inadequate due diligence before offering the product. Financial advisors have a duty to recommend investments that align with an investor’s age, objectives, financial needs, and tolerance for risk. When this standard is not met, investors may have the right to seek recovery through FINRA arbitration or other legal remedies.

Did You Sustain Losses By Investing In FS Specialty Lending Fund?

Did you experience losses because of investing in FS Specialty Lending Fund due to your broker or financial advisor? If so, contact Soreide Law Group online or by phone at (888) 760-6552 to speak with a securities attorney about the potential to recover your losses. Soreide Law Group has helped investors nationwide recover money lost in unsuitable or risky investments. The firm operates on a contingency fee basis and advances all case costs on behalf of its clients.