SEC sues investment firm, alleging fraud

Nick Snow
OGJ Washington Editor

WASHINGTON, DC, Sept. 24 -- The US Securities and Exchange Commission sued Texas Securities Partners LLC of Plano, Tex., and its president, Tony E. Morrison, on Sept. 15 for alleged oil and gas stock fraud.

TSP, at Morrison’s direction, fraudulently sold fractional interests in oil and gas offerings from January 2005 through June 2008 to more than 500 investors nationwide, the SEC said in a civil complaint filed in US District Court for Northern Texas in Dallas.

It alleged that the firm raised $12.7 million from investors by making material misrepresentations regarding past performance, expected returns, and risk.

SEC alleged TSP representatives said that a previous offering provided a $30 million return to investors, that the investor would pay out 80-120% cash-on-cash return in the first year, that no project had resulted in a dry hole, and that the investment was a “sure thing.”

The complaint said that none of TSP’s offerings returned investor principal or profits and that three of the wells were dry holes. It also alleged that TSP’s offerings were not registered with the commission and were not otherwise exempt from registration.

Morrison and TSP settled the allegations without admitting or denying them by consenting to a final judgment barring it from future violations of certain federal securities laws and holding it liable for a $1.2 million disgorgement payment plus $52,802.44 of prejudgment interest, the SEC said.

It added that the judgment does not order Morrison and TSP to pay civil penalties and waives the disgorgement and prepayment interest payments based on the defendants’ sworn financial statements and supporting documents.

In a follow-on administrative proceeding, Morrison also accepted an order barring him from associating with any securities broker or dealer.

Contact Nick Snow at nicks@pennwell.com.

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