December 4, 2013 Comments (0) Blog, Securities Fraud

Update on Securities Investigation Involving Reef SWD

(Last Updated On: July 17, 2015)

Have you suffered losses in Reef SWD 2007-A, L.P. (also known as Reef Saltwater Disposal 2007-A)?  If so, the securities attorneys of The White Law Group may be able to help you recover your losses through a FINRA arbitration claim.

According to a Form S-1 filed with the SEC on March 23, 2013, Reef SWD raised approximately 11 million dollars. However, as of December 31, 2012, Reef SWD had only distributed “approximately $2.0 million (unaudited) to such investors.” After a mere three years, Reef SWD filed for bankruptcy in 2010. Operating assets were sold for approximately $1.3 million and final distributions were distributed in the first quarter of 2013. Needless to say many investors lost big on their investment in Reef SWD.

Oil and gas partnerships are speculative, high-risk investments that are not suitable for most investors. According to the same SEC file, Reef has sponsored 56 drilling partnerships since 1996 and participated in the drilling of 170 completed wells. Of the 170 wells drilled, 55 of those wells were dry holes. That’s roughly 30% of the wells, and that’s not including producing wells that have yet to turn a profit.  It appears that of the 26 drilling and saltwater disposal partnerships sponsored by Reef and sold before the formation of Reef SWD-2007, only 3 of the partnerships have paid investors distributions that exceeded their capital investment.

The extremely high sales commissions associated with Reef SWD may have provided some broker-dealers with incentive to overlook suitability requirements and withhold certain information regarding the risks involved. According to theForm Reg-D filed for Reef SWD 2007, the partnership used $1,650,000 to cover the cost of sales commission. That translates to a 15% commission for broker-dealers that sold Reef SWD.

Broker-dealers have a duty to their clients to perform the necessary due diligence on an investment before offering it for sale to their clients, and to ensure that any investment recommendation that is made is suitable in light of the client’s age, investment experience, net worth, and investment objectives.  Given what is known about Reef SWD 2007-A, it appears that the firms that sold the investment failed to perform the adequate due diligence on the product before offering it to their clients and could be held liable for investment losses.

To determine whether you may be able to recover investment losses incurred as a result of your purchase of  Reef SWD 2007-A or another Reef Oil and Gas private placement investment, please contact The White Law Group at 312-238-9650 for a free consultation.

The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Boca Raton, Florida.

For more information on The White Law Group, please visit our website athttp://www.whitesecuritieslaw.com.

-->