Corporate & Securities Law

Main Street Natural Gas Bonds: The Ripple Effects Continue

By Mark Maddox

Main Street Natural Gas Bonds are an investment that many investors would like to forget. On Sept. 15, a $700 million deal called Main Street Natural Gas Bonds exploded, plummeting in value after Lehman Brothers Holdings - which guaranteed the bonds - filed for bankruptcy protection. Thousands of individual investors were affected, with many literally wiped out financially. 

Main Street Natural Gas Bonds were marketed and sold by some broker/dealers as safe, conservative municipal bonds. The reality is they were not. Instead, the Main Street bonds invested in complex natural gas derivative contracts that bet on the future costs of natural gas. The $700 million that Main Street borrowed to finance the contracts was placed with Lehman Brothers, which in turn, agreed to arrange delivery of some 200 billion cubic feet of natural gas at below-market prices.

Lehman?s promise went up in smoke when its fiscal health deteriorated beyond repair and it filed for bankruptcy protection. The ripple effect - and subsequent financial losses for investors - reverberated back to the value of the Main Street Gas bonds. 

Many investors who put their money in Main Street Natural Gas Bonds say their brokerage failed to disclose the fact that the value of their investment was tied to the financial health of Lehman Brothers. These same investors also contend they never received a prospectus about the bonds, which should have revealed key information and facts that investors are entitled to know.

If you believe you were misled about the safety of Main Street Natural Gas Bonds, contact us. A member of our securities fraud team will review your situation to determine if there is a viable claim to recover some or all of your investment losses. 

Full post as published by Representing Investors on January 29, 2010 (boomark / email).