Texas Securities Attorneys
While it’s hard to imagine that fraudsters could be among the vast plains and rolling hills of Texas, investment fraud does happen in Texas, and it’s up to Texans to protect themselves—and understand where they can go for help.
On July 3, 2019, the Securities and Exchange Commission (SEC) charged four executives with securities fraud for allegedly misleading investors. The SEC asserts that United Development Funding (UDF), a group of investment funds that purports to deploy investor capital to homebuilders and land developers, solicited investors by advertising steady, annual returns of up to 9.75%, as well as regular distributions. Investors, however, allegedly had no idea where their distributions were really coming from. Hollis Greenlaw, Benjamin Wissink, Theodore Etter, and Cara Obert allegedly took funds from the UDF IV fund to pay earlier investors in the UDF III, instead of using that money to finance real estate projects, as promised. According to the SEC’s complaint, this alleged nefarious activity took place from at least January 2011 to at least December 2015. From 2008 to 2013, UDF IV raised over $610 million from investors.
While it can be uncomfortable to think about securities fraud, the harsh truth is that it can happen anywhere, and Texas’ independent spirit of innovation makes it a target for crooks. If you believe you’ve been a victim of fraud, don’t hesitate to contact Texas securities attorneys.How does Texas Protect Investors?
The State of Texas protects investors through the provisions of the Texas Securities Act. The Texas Securities Act regulates the registration of securities offered in Texas and the brokers and broker-dealers who offer such securities. The Act also outlines the process by which securities are registered, and defines which securities are exempt from registration.
The Texas State Securities Board enforces the Texas Securities Act through civil, criminal, and administrative actions. Helmed by Securities Commissioner Travis J. Iles, the Texas State Securities Board regulates the registration and issuance of securities in Texas. It also registers the brokers and brokerage firms who sell securities or give investment advice.
While its headquarters is in Austin, the Texas State Securities Board also has offices in Dallas, Houston, Lubbock, and Corpus Christi. Its staff includes attorneys, accountants, and financial examiners
The TSSB comprises different divisions:
- Inspections and Compliance
- General Counsel
- Staff Services
- Investor Education
The Enforcement Division detects and prevents violations of the Texas Securities Act. Violations may include fraud associated with the sale of securities, illegal sales of unregistered securities, or sales of securities by brokers who are unregistered. On its website, the Enforcement Division asserts, “Criminal referrals are made to district attorneys and United States attorneys throughout the State, and the Division routinely assists prosecutors in drafting indictments, presenting cases to grand juries, and the trial of criminal cases.”
The Registration Division reviews all applications to register securities offerings in Texas. In 2017, it processed 64,000 securities registration and notice filings (for securities exempt from registration). It also fields questions from the public. According to its website, “As of August 31, 2017, there were 345,000 individuals and businesses authorized by the Agency to sell securities or render investment advice in Texas.”
The Inspections and Compliance Division inspects the books and records of firms, primarily investment advisors registered in Texas and broker-dealers that are not members of the Financial Industry Regulatory Authority (FINRA). It also investigates complaints against firms registered under the Texas Securities Act. According to its website, “Each year, the Division seeks to examine approximately 18% of Texas dealers and investment advisers not regularly examined by other authorities.”
The General Counsel Division advises the governing Board of the TSSB, Securities Commissioner, and staff regarding the interpretation of the Securities Act and other rules and regulations.
The Staff Services Division performs administrative tasks and prepares and distributes state-mandated reports.
The Investor Education Division helps Texans make informed decisions about their financial future by disseminating relevant information, including teaching guides, financial planning guides, press releases, and investor alerts. For example, the TSSB published The Investor’s Guide to Cryptocurrency Offerings. The Board urges investors not to get caught up in the hype surrounding Bitcoin and other forms of cryptocurrency and to fully research cryptocurrency before deciding to invest. The TSSB’s commitment to investor protection goes far beyond the borders of Texas. In 2018, Joe Rotunda, director of the Enforcement Division, spoke on a panel on detecting and preventing cryptocurrency fraud at the U.S. Commodity Futures Trading Commission conference in Washington, D.C.Oil and Gas Investments: What Investors Need to Know
Texas has long been a mecca for speculators hoping to seek their fortune in the oil and gas industry that flourishes in the Permian Basin and other regions around the state. While it can be easy to get caught up in the hype surrounding the prospect of “striking it rich,” it is important to be educated on oil and gas investments before taking the leap. Consider choosing an investment professional who is well-versed in the world of oil and gas.
Message boards like the Texas Investment Network feature ads touting generous, or even guaranteed, returns: “You will get up to 15% in return! Guaranteed!” Promises of “guaranteed” returns should raise a red flag, because no one can ever guarantee that an investment will be profitable. Steady returns (with no fluctuation based on market ups and downs) can be one sign of a Ponzi scheme. To this end, the Securities and Exchange Commission cautions investors to do their own due diligence in its Investor Alert entitled Private Oil and Gas Offerings.
Before investing in oil and gas, ask yourself the following questions:
- Who is offering the investment? Are they registered with the Texas State Securities Board? With the SEC? With the FINRA?
- Does the broker have experience selling oil and gas investments? What is the vetting/due diligence process for these investments? Does the broker have a personal relationship with the promotor or are they free from conflicts of interest?
- Has someone else already drilled the area you are considering drilling? If so, how do you know that there is any oil left over for you?
- If the area has not been drilled, what evidence do you have that there is oil there? ‘
- What information does the broker’s “due diligence report” contain? How did the broker independently evaluate the oil and gas offering?
- What is your money going to be used for? How much of your money will go towards drilling expenses and how much will go to sales fees? How will those sales fees be calculated?
- How much money will the promoter make even if the well comes up dry?
- Do your interests align with the promoter’s interests?
- Are you willing to lose your entire investment if the oil and gas investment turns out not to be profitable?
If you feel that you may have been misled by an unscrupulous broker or promoter promising guaranteed returns on energy investments, don’t hesitate to contact the Texas securities attorneys of Fitapelli Kurta at (877) 238-4175 or firstname.lastname@example.org.How Can Texas Investors Protect Themselves?
How can Texas investors protect themselves from securities fraud in Texas? Education is key. First, before choosing a broker, make sure to investigate their record on BrokerCheck. You can also call the TSSB at (512) 305-8301 to make sure that a broker is licensed to sell securities in Texas.
The Texas State Securities Board runs an Investor Education campaign designed the arm Texans with financial knowledge, thus preventing securities fraud in Texas. To that end, they have produced the Texas Investor Guide. In the preface, Securities Commissioner Travis J. Iles writes to investors, “The best defense against investment fraud … is self-defense. The Investor Guide will help you on the path to financial well-being.”
The Texas Investor Guide covers a myriad of topics, including:
- Why Invest?
- Making Investments
- Principles of Investing
- Investing for a Secure Retirement
- Avoiding Scams and Understanding High-Risk Investments
- Finding a Financial Professional You Can Trust
- Glossary of Terms
While the Texas State Securities Board (TSSB) helps prevent securities fraud in Texas, empowering investors through education and overseeing and regulating stockbrokers and financial advisors who operate in Texas, its authority is limited. It cannot represent investors in lawsuits, mediations, and private arbitrations (such as those that happen before a FINRA arbitration panel). Only securities attorneys, including Texas securities attorneys, can represent investors and recover funds. If you would like to learn more about your options for recovery, don’t hesitate to contact the Texas securities attorneys of Fitapelli Kurta at (877) 238-4175 or email@example.com. The securities attorneys of Fitapelli Kurta handle arbitrations nationwide and can partner with local counsel in Texas in other proceedings.Who Should I Call?
There’s no need to be gun shy about investing in the stock market. It is important, however, to stay informed about securities fraud in Texas so that you can protect yourself and your financial future.
If you fear you may have been a victim of a financial crime involving securities fraud in Texas, please contact the experienced securities attorneys of Fitapelli Kurta. Our securities fraud attorneys have worked with investors from Texas. Whether you’re in Austin, Dallas, Houston, Tyler, Brownsville, or any other city or town in Texas, we’re here to help you. We get only paid if you do. Our attorneys work on contingency: we only collect a fee from clients if we can recover money on their behalf. Call (877) 238-4175 or email firstname.lastname@example.org for your free case consultation.