The claim says Morgan Stanley pitched Greenbacker as a safe, income-generating play — but the investor’s $1 million stake collapsed by more than 80%.
MANCHESTER, NH, UNITED STATES, November 6, 2026 /EINPresswire.com/ — A retired investor who lost hundreds of thousands of dollars in a renewable energy fund is now seeking recourse through arbitration, with the national securities law firm KlaymanToskes filing a FINRA claim against Morgan Stanley Smith Barney LLC (“Morgan Stanley”). The claim, FINRA Case No. 26-02563, seeks $610,000 in damages and alleges the brokerage misrepresented Greenbacker Renewable Energy Company LLC (“Greenbacker”) as a low-risk investment offering roughly 6% tax-deferred income, while failing to perform adequate due diligence and recommending an unsuitable, illiquid private placement.
KlaymanToskes, which currently represents multiple investors in claims tied to Greenbacker and other alternative investments, is inviting others who suffered similar losses through Morgan Stanley or any other brokerage to reach out to attorney Lawrence L. Klayman, Esq., at 888-997-9956 or investigations@klaymantoskes.com for a free and confidential consultation about potential recovery options.
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According to the Statement of Claim, Morgan Stanley advised the retired investor to put $1 million into Greenbacker shares in February 2021, framing the fund as a low-risk vehicle that would deliver approximately 6% tax-deferred cash flow. The firm allegedly touted the fund’s renewable energy projects as poised to benefit from favorable government policies, yet did not adequately disclose the fund’s leverage, illiquidity, substantial fees, or the risks to its distributions.
Morgan Stanley is also accused of distributing Greenbacker marketing materials without independently verifying their accuracy, and of failing to investigate whether the fund’s distributions were sustainable. The investor was never told 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 at any time.
The warning signs materialized in September 2023, when Greenbacker suspended its share repurchase program, followed by the suspension of distributions in May 2024.
Greenbacker later reduced its reported share value and, in 2026, agreed to be acquired by MN8 Energy at approximately $1.71 per share — a stark contrast to the investor’s original purchase price of $8.96 per share. The claim alleges the investor’s $1 million investment declined more than 80% in value, translating to roughly $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
Why it matters: This case underscores the risks of non-traded alternative investments marketed as conservative income generators, particularly for retirees. It also signals that brokerage firms may face liability when they fail to vet such products or disclose their true risks, a lesson that could resonate with investors nationwide.
