Did you lose money investing in Rhino Resource Partners?
Galvin Legal, PLLC is launching an investigation on behalf of investors who suffered losses investing in Rhino Resource Partners at the recommendation of their financial advisor. If you suffered losses investing in the investment, then Galvin Legal, PLLC may be able to help you recover your losses in a Financial Industry Regulatory Authority (“FINRA“) arbitration claim against the brokerage firm that recommended the investment.
Rhino Resource Partners produces and markets coal in central and northern Appalachia. The company, which is based in Lexington, Kentucky, markets a broad range of coal to a customer base that includes electric utilities in the United States.
UPDATE 7/25/2020: On July 22, Rhino Resource Partners, announced that it has filed voluntary petitions for relief under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of Ohio. The company purportedly obtained $11.75 million of post-petition financing and the support from a stalking horse bidder to acquire the company. According to the announcement, the company plans to use the bankruptcy process to implement an orderly sale of substantially all of its assets in an effort to “maximize value for all stakeholders and allow for the prospect of continued employment and business opportunities at its operating locations.”
What is a Master Limited Partnership (MLP)?
Master Limited Partnerships (“MLPs”) are high-risk high-commission complex investments that are generally only suitable for sophisticated high net worth investors. According to reports, since 2009, MLPs have raised more than $100 billion from initial public offerings and follow-on sales. Investors are often lured into these products with promises of steady payout increases and tax advantages.
Due Diligence Requirement
FINRA requires brokerage firms to conduct due diligence on investments, such as Rhino Resource Partners, and to conduct a suitability analysis when recommending securities to a customer that takes into account the customer’s knowledge and experience. FINRA Rule 2111(a) states that “a member or an associated person must have a reasonable basis to believe that a recommended transaction or investment strategy involving a security or securities is suitable for the customer, based on the information obtained through the reasonable diligence of the member or associated person to ascertain the customer’s investment profile. A customer’s investment profile includes, but is not limited to, the customer’s age, other investments, financial situation and needs, tax status, investment objectives, investment experience, investment time horizon, liquidity needs, risk tolerance, and any other information the customer may disclose to the member or associated person in connection with such recommendation.”
Rule 2111 is composed of three main obligations: reasonable-basis suitability, customer-specific suitability, and quantitative suitability. Brokerage firms that fail to conduct adequate due diligence on investments they recommend, such as Rhino Resource Partners, or that make unsuitable recommendations can be held responsible for the customer’s losses in a FINRA arbitration claim.
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