Securities Lawyers Blog
Broker Benjamin Cox (Cox) has settled charges brought by the Financial Industry Regulatory Authority (FINRA) concerning improper sales of oil and gas private placement offerings sold by Red River Securities LLC (Red River). Cox accepted a one-year bar from the securities industry and a fine of $5,000.
Cox entered the securities industry in 2010 when he joined Red River. Cox was employed at Red River until termination in March 2012. According to Cox’s BrokerCheck, in March 2012, Red River filed a termination notice stating that a potential client called Red River explaining that his suitability information was not accurate and was not the information that the client had provided to Cox.
FINRA alleged that from September 2011, through March 2012, Cox cold called potential investors for oil and gas offerings offered and sold by Red River. During the calls with potential investors, Cox was responsible for documenting suitability information from the potential investors to ensure that the investments were appropriate for those investors. FINRA found that Cox was supposed to verify the potential investor’s name, address, occupation, and obtain financial and investment experience information in order to evaluate the suitability of the oil and gas private placements for the customer.
After gathering the information, Cox was then required to submit contact forms to Red River. However, FINRA alleged that in approximately 48 instances, Cox falsified the suitability information on various contact forms that he submitted to Red River. FINRA determined that the contact forms contained false information about the potential investor’s address, occupation, financial status, and/or investment experience. As a result of the foregoing conduct, FINRA found that Cox’s business activities violated FINRA Rules concerning fair trade and dealing.
As the Securities and Exchange Commission (SEC) has found private securities offerings of oil and gas ventures pose a substantial danger for investor fraud. An SEC Investor Alert listed common red flag sales pitches that fraudulent oil and gas investments often make to investors including: (1) Sales pitches referring to the high price of oil and gas; (2) “Can’t miss” wells and “guaranteed” returns; (3) Promises of high returns with little risk; (4) Sales pressure to purchase quickly; and (5) Sales pitches touting new technology to get higher production out of low-producing wells.
The securities attorney’s at Gana Weinstein LLP are investigating the improper sale of private oil and gas offerings to investors. Our consultations are free and we welcome any inquiries concerning securities matters.