Claim Alleges Morgan Stanley Misrepresented Greenbacker as a Low-Risk Investment Offering 6% Tax-Deferred Income
MANCHESTER, NH, UNITED STATES, November 6, 2026 /EINPresswire.com/ — A fresh arbitration dispute puts a spotlight on how alternative investments were pitched to retirees. National investment loss and securities law firm KlaymanToskes has filed a Financial Industry Regulatory Authority (“FINRA”) arbitration claim against Morgan Stanley Smith Barney LLC (“Morgan Stanley”), seeking $610,000 in damages on behalf of a retired investor who suffered substantial losses in Greenbacker Renewable Energy Company LLC (“Greenbacker”). The claim, FINRA Case No. 26-02563, alleges that Morgan Stanley misrepresented the investment’s risks, failed to conduct adequate due diligence, and recommended an unsuitable, illiquid private placement.
KlaymanToskes currently represents numerous investors in claims involving Greenbacker and other alternative investments. Investors who suffered losses in Greenbacker recommended through Morgan Stanley or another brokerage firm are encouraged to contact attorney Lawrence L. Klayman, Esq., at 888-997-9956 or investigations@klaymantoskes.com for a free and confidential consultation to discuss their potential recovery options.
According to the Statement of Claim, Morgan Stanley recommended that the retired investor purchase $1 million in Greenbacker shares in February 2021, representing the fund as a low-risk investment offering approximately 6% tax-deferred cash flow. Morgan Stanley allegedly promoted the investment’s renewable energy projects as positioned to benefit from favorable government policies, without adequately disclosing the fund’s leverage, illiquidity, substantial fees, or risks to its distributions.
The claim alleges that Morgan Stanley provided Greenbacker marketing materials without independently verifying the information and failed to adequately investigate whether the fund’s distributions were sustainable. The investor was allegedly not informed that distributions could be funded through borrowed money or investors’ own capital rather than operating income, or that the share repurchase program could be suspended.
In September 2023, Greenbacker suspended its share repurchase program, followed by the suspension of distributions in May 2024.
Greenbacker subsequently reduced its reported share value and, in 2026, agreed to be acquired by MN8 Energy at approximately $1.71 per share, compared with the investor’s original purchase price of $8.96 per share. The claim alleges that the investor’s $1 million investment declined more than 80% in value, resulting in approximately $610,000 in damages after accounting for distributions received.
“Investors who were recommended Greenbacker as a low-risk, income-producing investment should understand that non-traded securities can carry significant risks, including illiquidity, leverage, and the potential suspension of distributions,” said Lawrence L. Klayman, Managing Partner of KlaymanToskes. “Brokerage firms are responsible for conducting reasonable due diligence and ensuring that investors are adequately informed of these risks before recommending an investment. When they fail in those duties, they may be held liable in a FINRA arbitration claim.”
The claim alleges unsuitable recommendations, inadequate due diligence, misrepresentations and omissions, negligence, breach of fiduciary duty, violations of Regulation Best Interest, and failure to supervise.
Investors who suffered losses in Greenbacker Renewable Energy Company LLC recommended through Morgan Stanley or another financial advisor or brokerage firm are encouraged to contact KlaymanToskes at 888-997-9956 or investigations@klaymantoskes.com for a free and confidential consultation to discuss their potential recovery options.
About KlaymanToskes
KlaymanToskes is a leading national securities law firm which practices exclusively in the field of securities arbitration and litigation on behalf of retail and institutional investors throughout the world in large and complex securities matters. The firm has recovered over $650 million in Securities Litigation and FINRA Arbitration matters. KlaymanToskes has office locations in California, Florida, Nebraska, New York, and Puerto Rico.
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Contact
Lawrence L. Klayman, Esq.
KlaymanToskes, PLLC
+1 888-997-9956
investigations@klaymantoskes.com
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**Why it matters:** This case underscores the heightened scrutiny on brokerage firms recommending illiquid alternative investments to retirees. When due diligence fails and risks are understated, investors may seek recourse through FINRA arbitration, signaling a broader accountability trend in the industry.
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