At the Securities Lawyers, we have helped many clients recover losses due to investments in MLP oil and gas. Master limited partnerships (MLPs) are high-risk investments due to the fact that they are able to become illiquid, meaning that you may be unable to sell them as their value plummets. Oil and gas MPLs are especially complex.
When we talk about what are oil and gas investments, what I think of mostly are these limited partnerships that came about. So oil and gas is really just kind of an industry sector, and so you might buy stocks or bonds or different things that have to do with oil and gas, but what we're really talking about or see with our clients is the specific limited partnerships or master limited partnerships, MLPs. Everything in the investment industry has an acronym. And they are, again, just another way of sort of pulling money together with promises of returns, and this time it's in a particular sector. It's oil and gas.
But the problem with these investments, or what can be, is they're especially risky. Sometimes they're liquid. Sometimes you can't sell them, so they're not traded, and so you're stuck with it if it starts to drop. Sometimes they have extraordinary management fees or other fees that are kind of hidden within the master limited partnership that are very hard to understand or to see, but they also add this added risk of now you've got this kind of commodity risk, that you're not just invested in some business, you're also invested in the future of oil and gas and what those prices are.
And so the real issue is not that nobody should buy an MLP ever. It's that for a lot of average investors and retirees, they're just far too risky. They're not suitable for their needs and really shouldn't be a part of their portfolio and, unfortunately, too often are. And in my opinion it's often because they pay a higher commission to the broker than other investments and that's why you see them so often.