Texas E & P Partners – Securities investigation
Have you suffered losses investing in a Texas E & P Partners offering? The White Law Group is investigating potential claims involving broker dealers who may have unsuitably recommended Texas E & P Partners to investors.
According to a complaint filed by the SEC on June 26, the regulator has filed charges against the founder of Texas E&P Partners, Inc., an oil and gas operating company, for allegedly misappropriating investor funds. The founder has reportedly agreed to pay over $500,000 to settle these charges.
The complaint alleges that from February 2015 to April 2017, Texas E&P raised $6.1 million from retail investors by offering and selling interests in joint ventures formed to drill and operate two separate oil well projects.
Contrary to representations made to investors, the founder/owner allegedly spent nearly $400,000 of these investor funds improperly for personal or improper business expenses, including entertainment, travel, retail expenses, and income taxes.
The owner of the company, a resident of Texas, has reportedly agreed to settle the SEC’s charges by consenting to the entry of a final judgment which purportedly orders him to pay $399,011 in disgorgement, $33,008 in prejudgment interest, and a $75,000 civil penalty, according to a press announcement.
Texas E & P Partners filed a form D private placement to raise capital from investors 2016 through the offering Texas E & P Holding.
The trouble with alternative investment products, like Texas E& P, is that they involve a high degree of risk. They are typically sold as unregistered securities which lack the same regulatory oversight as more traditional investment products like stocks or bonds.
An additional risk inherent to these offerings is also the general risk that comes with the energy market. The energy market has seen enormous losses over the last few years due to the declining cost of oil and other energy commodities.
Recovery of Investment Losses
Broker dealers that sell alternative investments are required to perform adequate due diligence on all investment recommendations. They must ensure that each investment recommendation that is made is suitable for the investor in light of the investor’s age, risk tolerance, net worth, financial needs, and investment experience.
However, another issue with alternative investments is that the high sales commissions and due diligence fees. These high commissions and fees can provide brokers with an enormous incentive to push the product to unsuspecting investors who do not fully understand the risks. They may misrepresent the basic features of the products – usually focusing on the income potential and tax benefits while downplaying the risks.
Fortunately, FINRA does provide for an arbitration forum for investors to resolve such disputes. 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 found liable for investment losses in a FINRA arbitration claim.
Free Consultation with a Securities Attorney
If you are concerned about your investment in Texas E& P Partners or another private placement investment, please contact The White Law Group at 1-888-637-5510 for a free consultation.
The White Law Group is a national securities fraud, securities arbitration, and investor protection law firm with offices in Chicago, Illinois and Franklin, Tennessee. The firm represents investors throughout the country in claims against their brokerage firm.
For more information on the firm and its representation of investors, visit www.WhiteSecuritiesLaw.com.