FINRA expelled Plano, Texas-based Red River Securities, LLC, barred Red River CEO Brian Keith Hardwick, and ordered restitution in the amount of $24.6 million for fraudulent oil and gas securities dealings, including several suitability violations relating to elderly clients. A FINRA hearing panel also cited Red River and Hardwick for a pattern of misrepresentations and omissions involving sales of risky energy ventures, while finding that the firm and CEO Hardwick "intentionally and fraudulently" misrepresented and omitted material facts related to oil and gas offerings issued by Regal Energy, LLC, an affiliate of Red River Securities.
OHO Disciplinary Proceeding #2013035344201
The hearing panel found that Red River Securities misrepresented the amount of income distributed to investors in other Regal Energy offerings, failed to disclose material conflicts of interests, and similarly failed to disclose added risks posed by a certain type of oil well known as a "wildcat." Investigators concluded that Red River Securities and Hardwick fraudulently omitted material information concerning fees, such as "sizable" management fees, and failed to disclose that Hardwick participated in drafting a geologist's report that had been categorized as "independent."
FINRA referred to the case of a 74-year-old self-employed farmer and Red River Securities client who invested nearly $95,000—or more than half of her annual income—in three risky oil and gas ventures over the course of just one year, which the panel found was not suitable.
Upon finding that Red River Securities and Hardwick pocketed gains of $3.6 million in due diligence fees and commissions, additional money earned as owners of Regal Energy, and management fees, and contrasting those monetary gains with investors' total distributions of less than $500,000 from the $25+ million they invested in the offerings, the hearing panel called Red River Securities' misconduct "fraudulent" and "egregious," additionally charging the firm with failing to develop and enforce an adequate supervisory system.
If you have invested with any broker, firm, or financial adviser whose unsuitable sales of risky securities, excessive fees and commissions, or omissions of material facts and other required disclosures has proven harmful to your investments or interests, please call The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for investigation and consultation.