Ridgewood Energy shares have lost most of their value. Ridgewood raised money from investors to invest in oil and gas projects. This is a capital-intensive, speculative business. Its stock is very speculative.
The company’s website says Ridgewood was “founded to meet specific sector objectives of institutional and high net worth investors.” Unfortunately for investors, though, many brokers have sold Ridgewood Funds to unsophisticated investors who did not have a high net worth.
Broker-dealers and investment advisors are required by the Financial Industry Regulatory Authority (FINRA) to do “due diligence” on any particular investment before selling it. Brokerage firms are also required to only recommend investments that are suitable for their clients.
Suitability is determined by such factors as age, financial situation, liquidity needs, other ventures, risk tolerance, and investment experience.
Ridgewood shares were speculative. Only investors could who could afford to lose all their money should have bought them. However, brokers sold them to millions of ordinary people because they made large commissions.
The Ridgewood Energy K Fund and M Fund have been terminated. In a letter to Ridgewood M Fund investors, Ridgewood expressed its disappointment in the performance of the fund. Three of the five wells drilled were dry holes. The two wells which found gas failed to meet expectations. The K Fund appears to have encountered similar performance issues. According to form K-8, half of the 14 wells drilled in the K Fund were dry holes. Ridgewood investors have lost most of their money.
This is not the first time Ridgewood Energy Fund investors have received bad news. Letters sent out to investors in Funds O, Q, S, T, V and W announced that Ridgewood was forced to seek outside financing due to the cost of oil exploration.
Brokerage firms and investment advisors who sold Ridgewood shares to people who were not wealthy, sophisticated investors, can be held accountable for losses.
Williams Dirks Dameron LLC is investigating the matter, and seeking investors in the following Ridgewood Energy Funds:
• Ridgewood Energy I Fund
• Ridgewood Energy J Fund
• Ridgewood Energy K Fund
• Ridgewood Energy L Fund
• Ridgewood Energy M Fund
• Ridgewood Energy N Fund
• Ridgewood Energy O Fund
• Ridgewood Energy P Fund
• Ridgewood Energy Q Fund
• Ridgewood Energy R Fund
• Ridgewood Energy S Fund
• Ridgewood Energy T Fund
• Ridgewood Energy U Fund
• Ridgewood Energy V Fund
• Ridgewood Energy W Fund
• Ridgewood Energy X Fund
• Ridgewood Energy Y Fund
• Ridgewood Energy Z Fund