FINRA Expels River Securities LLC and Barred CEO Brian Keith Hardwick; Ordered Them to Pay $24 Million in Restitution

On February 14, 2017, the Financial Industry Regulatory Authority (FINRA) announced that a FINRA hearing panel has expelled Plano, TX-based Red River Securities, LLC, and barred its CEO, Brian Keith Hardwick.
Red River Securities, LLC, and Hardwick, were ordered by FINRA to jointly and severally pay $24.6 million in restitution to clients for fraudulent sales in five oil and gas joint ventures, characterizing the misconduct of both as “egregious.”
The FINRA panel found that Red River Securities and Hardwick allegedly intentionally and fraudulently misrepresented and omitted material facts in connection with the sales of interests in oil and gas joint ventures issued by Regal Energy, LLC, which is a close affiliate of Red River Securities. The oil and gas offerings, which the FINRA panel noted, were already high-risk ventures, allegedly misrepresented the amount of income distributed to investors in other Regal Entity joint ventures, failed to disclose material conflicts of interest, and failed to disclose that one of the wells was a “wildcat,” which carried additional risk.
One client, was a 74-year-old, self-employed farmer and dog breeder with a net worth of $2 million, liquidity of $20,000, and $150,000 in annual income. Given her level of liquidity and her self-employed and seasonal employment situation, the hearing panel found that her investment of $94,754, representing well over half of her annual income in three risky oil and gas ventures in a period of a year, was not suitable.
The FINRA panel’s decision also stated that Red River Securities and Hardwick allegedly failed to develop and enforce a suitable supervisory system and failed to mention the extent of their monetary gain, including $3.6 million in due diligence fees and commissions from the five offerings, money earned as owners of Regal Entities, and management fees. According to FINRA, investors received distributions of less than $500,000 from the more than $25 million they invested in the five offerings.
If you were a client of Plano, Texas-based Red River Securities, LLC, and/or Brian Keith Hardwick, and you suffered financial losses due to their recommendations or actions, or any other high-risk oil and gas investment, call Soreide Law Group for a no-cost consultation with a lawyer regarding your possible recovery of your investment at:  888-760-6552.
Soreide Law Group represents clients nationwide and we operate on a contingency fee basis.