A Financial Industry Regulatory Authority hearing panel has expelled a Plano, Texas-based brokerage firm from the industry, barred its CEO, and ordered both of them to pay customers $24.6M in restitution. Red River Securities LLC and Brian Keith Hardwick are accused of engaging in fraudulent sales involving five oil and gas joint ventures. Of the more than $25M that customers invested in the oil and gas offerings, they were paid distributions of under $500K in total.
According to the Texas securities case, the regulator claims that over a four-year period, Hardwick and the Texas brokerage firm purposely and fraudulently misrepresented and left out material facts related to interests in oil and gas joint ventures that were issued by affiliate Regal Energy LLC issued. Also, contends the SEc;
· The oil and gas ventures failed to properly represent how much income was distributed to investors in other Regal Entity joint ventures.
· These ventures did not disclose key conflicts of interest or that there was one well, specifically, that presented additional risks.
Hardwick and Red River Securities are accused of leaving out material information about substantial management fees that were to be paid to Regal Energy.
The FINRA arbitration panel said that the joint venture purchases was not suitable for two of the customers, including one investor, who is an elderly, self-employed dog breed and farmer. The panel found that given this customer’s finances, her more than $94K investment in three high-risk oil and gas ventures during one year made the investments unsuitable for her.
The FINRA panel accused Hardwick and Red River Securities of not developing and enforcing a supervisory system that was “robust” enough and failing to disclose their full monetary gain, which included $3.6M in commission and due diligence fees, money made from owning Regal Entities, and management fees.
Shepherd Smith Edwards and Kantas, LTD LLP represents investors in trying to recoup their losses. Contact our Texas securities fraud law firm. Our main office is in Houston but we work with clients throughout the state.
FINRA Hearing Panel Expels Red River Securities, LLC and Bars CEO Brian Keith Hardwick for Fraud; Ordered to Pay $24.6 Million in Restitution to Investors, FINRA, February 14, 2016