SEC Charges Griffin brothers with Fraud over Payson Petroleum Partnerships
Did you lose money investing in Payson Petroleum at the advice of your financial advisor? If so, the securities attorneys at The White Law Group may be able to help you to recover your investment losses by filing a FINRA Arbitration suit against the brokerage firm that sold you the investment.
On November 23, 2016, the SEC filed a civil action charging brothers Matthew Carl Griffin and William Daniel Griffin with fraudulently offering interests in two Texas partnerships.
Between November 2013 and July 2014, the Griffins, through their company, Payson Petroleum, Inc., allegedly conducted a fraudulent two-phase offering of interests in two Texas partnerships, raising $23 million from approximately 150 investors for the purpose of developing three oil and gas wells.
According to the SEC, the Griffins purportedly misled investors about Payson’s promised participation in the program and about Payson’s compensation as the program’s sponsor and operator.
According to the allegations, the Griffins misrepresented to the investors that Payson would contribute, up-front, 20% of the offering amount, or $5.4 million, and that this capital infusion would cover 20% of the cost of the wells.
Additionally, the Griffins reportedly told investors that Payson’s consideration as the program sponsor would be limited to 20% of any petroleum revenue generated by the wells. They allegedly promised investors that Payson would cover any cost overages, beyond the estimated $24 million, in drilling and completing the wells.
The SEC alleges that these were misrepresentations because Payson contributed no money to the offering and paid nothing toward the well costs. Payson reportedly appropriated the entirety of the offering proceeds net of offering costs and the company lacked the financial means to pay.
Investigating Potential Claims
The White Law Group continues to investigate the liability that broker dealers may have for unsuitably recommending the following Payson Petroleum offerings, among others.:
Payson Drilling Fund 2015 I
Payson Drilling Fund 2015 II LP
Payson Group LP
Payson North Texas Multi Well I LP
Payson Petroleum Jenny #1 LP
Payson Developmental Drilling Fund 2014 II LP
Alternative Investments – Are they suitable for you?
Broker dealers that sell alternative investments like Payson Petroleum offerings are required to perform adequate due diligence on all investment recommendations. They must ensure that each investment is suitable for the investor in light of the investor’s age, risk tolerance, net worth, financial needs, and investment experience.
Also brokers can earn high commissions for selling Reg D private placements, which may drive them to push the product to unsuspecting investors who do not fully understand the risks of these types of products. In this particular case, the Payson Petroleum private placements offered brokers 7% commission plus a 1.5% due diligence fee.
If a broker or brokerage firm makes an unsuitable investment recommendation or fails to adequately disclose the risks associated with an investment they may be liable for investment losses through FINRA Arbitration.
To determine whether you may be able to recover investment losses incurred as a result of your purchase of or another Payson Petroleum private placement investment, please contact The White Law Group at 1-888-637-5510 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 Franklin, Tennessee. For more information on the firm, visit www.WhiteSecuritiesLaw.com.