The law firm of Oakes & Fosher has had an ongoing investigation against securities broker Michael B. Barnett since we filed our first claim against him in July 2016. As can be seen in his publicly available FINRA BrokerCheck report, Michael B. Barnett has been the subject of multiple customer disputes over the course of his career. Two of these disputes were filed by Oakes & Fosher. All of these complaints were in connection with the security known as Breitburn Energy.
Michael B. Barnett is currently operating as a Tennessee based securities broker. He has worked in the securities industry for nine years. He has spent most of his career working as a registered securities broker for Hilliard Lyons–primarily out of the Marion, IL office.
His Registrations
- Edward Jones (2010-2012
- J.J.B. Hilliard, W.L. Lyons (2012-2019)
- Robert W. Baird & Co. (2019-Present)
The Allegations
- Oakes & Fosher filed its first claim against Hilliard Lyons regarding the allegations against Michael B. Barnett in June 2016. Our clients first contacted us after they lost almost all of their invested funds being invested in Breitburn Energy by Michael B. Barnett. On behalf of our clients, we alleged that Barnett violated the Illinois Securities Act, breached his fiduciary duty, handled their account negligently, breached contract, engaged in common law fraud, and made material misrepresentations and omissions of fact. Oakes & Fosher was able to recover $450,000 in compensatory damages and $100,000 in punitive damages due to the actions of Barnett and Hilliard Lyons. The Panel in this case agreed that purchasing this stock for customers seeking low risk was not appropriate, and concentrating investor accounts in this one stock was even more inappropriate.
- In November 2017, Oakes & Fosher filed its second claim against Hilliard Lyons regarding Michael B. Barnett. On behalf of our customers, we alleged that Michael B. Barnett made material misrepresentations, recommended unsuitable investments, and executed unauthorized trades concerning Barnett’s singular trading of Breitburn Energy. We were able to settle this case for $850,000 in damages.
- In May 2018, customers alleged that Michael B. Barnett breached his fiduciary duty, violated the Illinois Securities Act, made negligent misrepresentations and omissions, breached contract, and committed common law fraud. This case was settled for $65,000 in damages.
- In June 2018, a customer alleged that Michael B. Barnett breached contract, breached his fiduciary duty, violated the Kentucky Consumer Protection Act, violated the Kentucky Blue Sky Law, and violation of the Illinois Consumer Fraud Act. All the allegations were in connection with Breitburn Energy. This case was settled for $130,000 in damages.
Breitburn Energy
Breitburn Energy was an independent oil and gas master limited partnership, or MLP. Regular limited partnerships are privately traded securities that are not registered with the SEC. While these types of securities are similar to limited partnerships in some regard, they are in fact publicly traded. However, this did not make Breitburn Energy any more suitable for the customers that Michael B. Barnett allegedly recommended it to. The energy sector is one of the riskiest investment areas in the market and the fact that an oil and gas partnership is publicly traded does not change that. Due to the nature of the oil and gas sector, Breitburn Energy consistently dropped in value until it eventually filed for bankruptcy in May 2016.
What Does This Mean?
Securities brokers have a legal obligation to only recommend securities to customers for which they are suited for. This suitability is determined by factors such as investment objectives, risk tolerance, liquidity needs, and financial situation. It is expected of securities brokers to conduct the necessary due diligence required to discern an investment’s suitability based on these factors. All of the claims filed by Oakes & Fosher regarding Michael B. Barnett were on behalf of customers that claimed they made it very clear to him they wanted very low risk investments. Even if Michael B. Barnett had investors looking for a more speculative investment portfolio, it would still be incredibly unsuitable to over-concentrate that portfolio in a singular security like Breitburn Energy. Just because an investor has accepted more risk, does not mean their success or failure should be entirely dependent upon one speculative investment. Their invested funds should be suitably spread around among different investments.
Oakes & Fosher Can Help
Many investors are unaware of the legal recourse available to them after losing money due to securities broker fraud and/or negligence. The truth is that investors who believe they may have lost money in this fashion may be entitled to damages.
Oakes & Fosher dedicates its entire legal practice to representing investors across the nation. If you or someone you know has invested in Breitburn Energy through Michael Barnett, or any other Hilliard Lyons broker, please contact Oakes & Fosher for a free and private consultation. Oakes & Fosher handles cases on a contingency basis, which means there are no fees charged unless we collect for you.
