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FINRA Hearing Panel Expels B/D, Bars CEO, Orders $24Mn in Restitution
A FINRA hearing panel expelled Plano, TX-based broker-dealer Red River Securities, barred CEO Brian Keith Hardwick, and ordered the firm and Hardwick to jointly and severally pay $24.6 million in restitution to customers for fraudulent sales in 5 oil and gas joint ventures.
The hearing panel found that the respondents engaged in a pattern of misrepresentations and omissions over a 4-year period and involved sales in the risky joint ventures - though the hearing panel dismissed FINRA Enforcement’s allegations that the firm sold interests in 2 of the joint venture offerings in violation of the general solicitation prohibition for the private placement of securities under Regulation D.
Among other things, the panel found that Red River Securities and Hardwick intentionally and fraudulently misrepresented and omitted material facts in connection with the sales of interests in O&G joint ventures issued by Regal Energy, a close affiliate of Red River Securities. The panel also found suitability issues.
Investments in the 5 cited offerings totaled over $25 million. From that, Red River Securities and Hardwick earned $3.6 million in due diligence fees and commissions from 5 offerings, as well as money earned as owners of Regal Entities, and management fees. Investors received total distributions of less than $500,000.
