National investment fraud lawyers KlaymanToskes offers recovery options for Franklin Square Energy & Power Fund (FSEP) investors who have been unsuitably recommended to invest in the fund by their brokerage firm and/or broker/investment advisor. Our firm believes many investors may have been misled regarding the risks and liquidity issues associated with FSEP’s private placement.
If you suffered investment losses as a result of a recommendation to purchase Franklin Square Energy & Power Fund (FSEP) contact attorney Lawrence L. Klayman at (888) 997-9956 or lklayman@klaymantoskes.com for a free and confidential consultation to discuss recovery options. We do not collect attorney’s fees unless we are able to obtain a financial recovery for you.
Franklin Square Energy & Power Fund (FSEP) is a publicly registered, non-traded Business Development Company (“BDC”) sponsored by FS Investments. FSEP is a private placement that primarily invests in debt and equity securities in the energy and power sector.
FSEP has faced a number of challenges recently, including the suspension of its share repurchase program (“SRP”), redemption difficulties for investors, and continued instability of its share price. Our firm previously reported that FSEP’s NAV per share hit $2.60. As of today, March 28th, 2023, FESP’s NAV has decreased to $2.30 per share, representing a 77% decrease from its initial offering of $10 per share.
Franklin Square Energy & Power Fund (FSEP) is a high-risk, illiquid, private placement investment. Private placements or “Reg D” offerings can be highly volatile investments, as they are early-stage companies with limited information and are not bound to the same Securities Exchange Commision (“SEC”) disclosure requirements as public investment offerings.
As of March 17th, 2020, FSEP and its sponsor FS/EIG, along with its board of trustees, had suspended the share repurchase program. Since 2020, FSEP’s share repurchase program (“SRP”) has remained suspended, with the company stating global market events impacted “the financial markets and significantly disrupted U.S. and global economies, including energy markets.” According to its website, FSEP’s cumulative total return since inception (with sales charge) is -12.26%.
In its “risk factors disclosure” FS Investments states that “FSEP is a long-term investment for persons of adequate financial means who have no need for liquidity in their investment.”
In its initial offering, FSEP investors were required to have a net worth of at least $70,000 and an annual gross income of at least $70,000, or a net worth of at least $250,000.
Brokerage firms and their brokers/financial advisors who sold Franklin Square Energy & Power Fund (FSEP) may be liable for any losses incurred by investors.
Brokerage firms and their registered financial professionals have a duty to recommend suitable investments to their customers. KlaymanToskes believes brokers/advisors may have misrepresented the lack of liquidity and risk-factors related to investments in FSEP leading to unsuitable sales. Additionally, FSEP is a non-diversified fund, meaning its assets are only concentrated in one asset class, energy and power. Brokers/advisors that over concentrated their customers’ assets in FSEP may be liable for any losses incurred.
According to FS Energy’s Registration Statement (Form N-2) filing with the SEC, a shareholder’s total transaction cost for purchasing the fund is 11.5%. However, investors are also charged management fees of 6.42%. While these fees can be expected to impact an investor’s return, brokers/advisors who make an unsuitable recommendation to purchase a in order to generate large commissions and enrich themselves have conflicts of interest.
The violations discussed above each provide a basis for liability in a FINRA arbitration claim. To learn more about additional securities violations, see our account activity violations page.
If you suffered investment losses as a result of a recommendation to purchase Franklin Square Energy & Power Fund by your broker/financial advisor, you are encouraged to contact attorney Lawrence L. Klayman at (888) 997-9956 or lklayman@klaymantoskes.com for a free and confidential consultation to discuss recovery options.
We offer legal services on a contingency fee basis, meaning we do not collect attorney’s fees unless we are able to obtain a financial recovery for you.
KlaymanToskes is a leading national securities law firm which practices exclusively in the field of securities arbitration on behalf of retail and institutional investors throughout the world in large and complex securities matters. The firm has recovered over $250 million in FINRA arbitrations and over $350 million in other securities litigation matters. KlaymanToskes has office locations in California, Florida, New York, and Puerto Rico.
Lawrence L. Klayman, Esq.
888-997-9956