FS Investments Lawsuit Investigation

Suffered from FS Investments losses? We may be able to help. Contact us for a free and confidential consultation.

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All FS Funds    |    FSIC    |    CCT    |    REITs    |    BDCs

In March of 2020, FS Energy and Power Fund announced that it would terminate its quarterly tender offer and suspend its share repurchase program. According to The DI Wire, this has been attributed to the impact that the coronavirus (COVID-19) pandemic and crude oil production disputes have had on the price of oil.

As a result of the tender offer termination, The DI Wire reports, all previously tendered shares will be returned to shareholders, and no shares will be purchased moving forward. The share repurchase program has been suspended indefinitely.

The company also decided to suspend its regular cash distributions to shareholders after March 31, 2020. According to The DI Wire,

The board has not declared regular cash distributions for any period after March 31, 2020, and future cash distributions will be suspended until market conditions and the company’s financial operations support resuming distributions.

The FS Energy and Power Fund is a non-traded business development company (BDC) that invests in energy companies. FS Investments has previously suspended tender offers for its other BDCs as well, including FSIC II, FSIC III, FSIC IV, and CCT II. If you invested in any of these BDCs, you may have a claim.

Our firm is investigating all FS Investments funds. If you invested in any of the funds listed below, contact one of our securities attorneys. You may be eligible for monetary recovery.

• FS Credit Income Fund–I (FCRIX)
• FS Credit Real Estate Income Trust–I
• FS Energy Total Return Fund–I (XFEYX)
• FS Multi-Alternative Income Fund–I (FNNIX)
• FS Multi-Strategy Alternatives Fund (FSMSX)
• FS Investment Corporation II (FSIC II)
• FS Investment Corporation III (FSIC III)
• FS Investment Corporation IV (FSIC IV)
• FS Energy & Power Fund (FSEP)
• FS Global Credit Opportunities Fund–A (FSGCO–A)
• Corporate Capital Trust II (CCT II)

According to a tender offer announcement on the FS Investments’ website, the company has suspended its quarterly tender offers for a number of its funds due to the merger involving these investments. FS Investments called this the “first step in a staged liquidity plan for these funds.” The funds affected include:

• FS Investment Corporation II (FSIC II)
• FS Investment Corporation III (FSIC III)
• FS Investment Corporation IV (FSIC IV)
• Corporate Capital Trust II (CCT II)

Many people may have invested in these funds with the understanding that they would get a regular distribution. Instead, some of these investments have decreased from their original value, and many individuals report being stuck in illiquid investments.

If you invested in any of these FS Investments funds, speak with an experienced securities attorney today. You may be eligible to recover your losses.

In November of 2018, during a meeting with advisers and a call with analysts, FS Investments publicly admitted to various shortcomings. According to InvestmentNews, these shortcomings included

the eroding valuation of its flagship fund, the publicly traded FS Investment Corp., managing underperforming credits in that fund, which is currently working on a merger with another listed BDC; and investors’ and advisers’ potential confusion around calculating total returns of its BDCs.

While FS Investments was under-performing, the company was also working towards a merger with Corporate Capital Trust (CCT). FS Investments continued to focus on this merger despite various internal issues. In a conference call with analysts, FS Investments CEO and Chair Michale Forman stated

In summary, while we were disappointed with the company’s recent performance, we accept responsibility for these challenges that are focused on managing the underperforming credits, executing upon the FSIC-CCT merger, underwriting high quality new originations and explore all options for the non-traded funds to determine the best outcome for all our shareholders.

FS Investments also provided a Corporate Capital Trust (CCT II) fund to many investors. The quarterly tender officers for this fund have now been suspended, and some investors may be feeling stuck in this fund. If you lost money as a result of CCT II, you may be eligible to recover your losses. Fill out the form above to learn more.

Some of the FS Investments funds are real income trusts, or REITs. Generally, REITs are trusts which pool the resources of numerous small investors into one large fund, which is then invested in various real-estate holdings.

FINRA and the SEC have increased scrutiny into the way non-traded REITs are marketed to the public. Investors have complained that they were sold non traded REITs as low-risk, high yield investments, which may be inaccurate. Furthermore, a number of these investors report that they are unable to redeem their shares and feel stuck in an uncertain investment.

If you were placed in a FS illiquid REIT, we may be able to help. Speak with a lawyer today to learn more about your options.

FS Investments provides a variety of funds for business development companies (BDCs). The BDC with the most funds is called FS Investment Corporation (FSIC). According to FS Investments’ website, this BDC fund is “designed to provide a high level of current income.”

FS Investments, however, suspended its quarterly tender offers for a number of its BDC funds, including FSIC and CCT funds. If you invested in a FS Investments BDC (such as FSIC II, FSIC III, FSIC IV, CCT II, or FSEP) you may be eligible to recover your losses. Speak with an experienced securities attorney to learn more about your options.

Gibbs Law Group is currently investigating a number of REITs on behalf of shareholders. These REITs include:

• Northstar Healthcare Income REIT
• Benefit Street Partners Realty Trust
• Hospitality Investors Trust
• The Parking REIT
• Cole Credit Property Trust III (“CCPT III”)
• Apple non-traded REIT

If you invested in any of these REITs, or others, we may be able to help. Speak with a lawyer today to learn more.

Scott Silver

Scott focuses his law practice on securities arbitration and litigation and plaintiff-side class action litigation, representing individual investors and institutions in claims against brokerage firms, investment advisors, commodities firms, hedge funds and others.

Eileen Epstein Carney

Eileen is involved in the firm’s securities practice and has over a decade of experience in the legal world. She received her law degree from American University in 2005.

Dave Stein

David’s advocacy has generated major recoveries for consumers impacted by financial fraud. He was named to the Top 40 Under 40 by Daily Journal and a “Rising Star in Class Actions” by Law360.

Amanda Karl

Amanda is spearheading a securities lawsuit against NantHealth concerning fraudulent statements to investors about the success of its key product.