A FINRA hearing panel has expelled Red River Securities, LLC and barred its CEO, Brian Keith Hardwick, for fraudulent sales in five oil and gas offerings. They have also been ordered to pay $24.6 million in restitution to investors. According to FINRA, over the course of four years, Red River Securities and Brian Hardwick made misrepresentations and omissions in connection with the sales of interests in oil and gas joint ventures issued by Regal Energy, LLC, a close affiliate of Red River Securities.
FINRA found that Red River Securities and Brian Hardwick fraudulently misrepresented and omitted facts relating to the risky offerings. For example, they allegedly misrepresented the amount of income distributed to investors, failed to disclose material facts regarding the risk involved, and omitted information about the fees involved. The FINRA panel referred to this aforementioned misconduct as egregious and noted the “extent of the respondents’ monetary gain,” in which investors received total distributions less than $50,000 from the more than $25 million they invested in the offerings.
Master limited partnerships and private placements in oil and gas have been highly recommended investments over the past few years. Many brokerage firms and financial advisors have recommended clients to invest in oil and gas energy stocks and for the high yield or income potential. Touted to investors as secure, high quality income generating investments with only a moderate risk, these investments were anything but. Oil and gas MLPs are, in fact, very risky because of their connection with oil prices. The massive slides in oil prices have caused these investments to lose substantial value, which has resulted in significant investment losses for many investors.
Brokerage firms and financial advisors should never have sold these risky investments to investors with conservative or moderate investment objectives. Unfortunately, these risky investments were often recommended to retirees and conservative investors who intended to protect their principal or earn income.
In order to protect investors, FINRA rules require broker-dealers to establish and implement a reasonable supervisory system. If broker-dealers fail to do so, they may be held liable to account holders for damages stemming from a lack of supervision. As a result, investors who have suffered losses stemming from a stockbroker’s unsuitable oil and gas MLP or private placement recommendation can bring forth claims to recover damages against the brokerage firm, which has a duty to supervise its employees in order to prevent misconduct and protect investors.
Have you suffered losses in your oil and gas MLP investment? Did your broker-dealer or stockbroker recommend these risky investments despite your conservative investment objectives? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation. Mr. Pearce is accepting clients with valid claims against brokerage firms and their stockbrokers for unsuitable oil and gas master limited partnership recommendations, failure to do due diligence, and/or other misconduct.
The most important of investors’ rights is the right to be informed! This Investors’ Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 35 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities, and investment law issues. The lawyers at our law firm are devoted to protecting investors’ rights throughout the United States and internationally! Please post a comment, call (800) 732-2889, send Mr. Pearce an email at email@example.com, and/or visit our website at www.secatty.com for answers to any of your questions about this blog post and/or any related matter.