SEC Charges Three Advisors in Alleged Sale of Unregistered Oil and Gas Securities
From the desk of Jim Eccleston at Eccleston Law
The Securities and Exchange Commission (SEC) has charged three advisors and agents with selling millions of dollars in unregistered oil and gas securities to retail investors while failing to disclose conflicts of interest.
Wealth Management reports that in early September, the SEC brought actions against Florida-based Charles D. Oliver and California-based David Ortiz and Kevin Richards, along with Ortiz’s entity, DaveGlo Investment Group. Although the three individuals did not operate together, the SEC alleges that each sold high-risk oil and gas investments tied to offerings sponsored by Resolute Capital Partners and Homebound Resources.
According to the SEC, Resolute structured the oil and gas debt and equity investment vehicles, while Homebound served as the project sponsor responsible for locating and acquiring the underlying wells.
According to Wealth Management, the SEC previously charged Resolute, Homebound, and their principals in September 2021 for misleading investors and omitting material information in connection with offerings that collectively raised approximately $250 million.
The SEC alleges that Oliver, a licensed insurance agent doing business as Hidden Wealth Solutions, solicited investors through a radio show and podcast focused on alternative investments and tax strategies. In 2018, Oliver became a referral agent for Resolute offerings through an intermediary, Beacon Global, which paid him monthly fees and transaction-based compensation while prohibiting him from engaging in sales activity. Despite that restriction, the SEC claims Oliver used his media platform to solicit investors and sold roughly $52 million in oil and gas investments to about 50 retail clients between 2020 and 2021. The agency alleges that Oliver downplayed the risks of the investments and failed to disclose that he earned approximately $4.3 million in compensation tied to the sales.
The SEC further alleges that Richards marketed and sold about $12 million in similar oil and gas securities through his entities, KNR Wealth Management and KNR Consulting Group. Richards also connected with Resolute through Beacon Global and promoted the investments using emails, networking events, local news interviews, and his own talk radio show. Wealth Management reports that Richards did not disclose that he received transaction-based compensation, which totaled approximately $618,794, while many of his clients ultimately lost their invested funds.
Ortiz allegedly sold approximately $18 million of the same investments to around 20 retail investors, as reported by Wealth Management. The SEC claims he relied on mass marketing tactics, including radio commercials in the Los Angeles area and in-office workshops in Whittier, California, to pitch the offerings. As with Richards, the commission alleges that many of Ortiz’s clients lost their money, while Ortiz earned roughly $816,934 in transaction-based compensation.
According to Wealth Management, Oliver denied acting as an investment advisor and denied selling the oil and gas securities, though he acknowledged informing some clients of his participation in the offerings.
Richards and Ortiz agreed to settle the SEC’s charges without admitting or denying its findings. Under the settlements, both individuals will no longer offer or sell securities. Richards also agreed to a five-year bar from acting as, or associating with, a broker, dealer, or investment adviser. According to SEC records, Ortiz has been barred. Wealth Management reports that a federal judge will determine civil penalties at a later date.
Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.
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