In 2019, the Texas State Securities Board took enforcement actions that resulted in the repayment of $2.58 million to investors and $575,000 in fines paid to the State of Texas.
The funds returned to investors came through administrative orders, a civil court forfeiture order, and rescission offers the State Securities Board negotiated with firms and individuals.
In criminal enforcement, the State Securities Board investigated and assisted in the indictment of 13 individuals in state district and federal courts. The cases involve more than $30 million in alleged investment fraud.
The Securities Board also assisted in the prosecution and conviction of nine individuals.
Notably, State Securities Board enforcement attorneys were appointed special prosecutors to assist the Wichita County District Attorney’s Office in the conviction of oil and gas investment promoter Daniel C. Walsh, who was sentenced to 18 years in state prison.
“The agency works in criminal and civil cases, administrative proceedings, and on a national level in collaboration with other states,” said Texas Securities Commissioner Travis J. Iles. “In all venues, our staff demonstrates the commitment and expertise that is needed to protect investors in an increasingly complex financial world.”
Read the full report, The Year in Enforcement 2019
Contact: Robert Elder, Director of Communications and Investor Education, firstname.lastname@example.org
The largest total repaid to Texas investors came from Metals.com, which has been sanctioned by Texas and six other state securities regulators for illegal and fraudulent practices in encouraging investors to liquidate their retirement savings and invest the proceeds in precious metals.
Texas was the first state regulator to enter an order against the company, which allegedly operates a sophisticated cold-calling operation from Beverly Hills, Calif.
Under the terms of a July 1, 2019, Order, Metals.com agreed to offer a full refund to 84 Texas investors, most of whom are elderly. According to a previous emergency action against Metals.com, the company warned potential investors that their money isn’t safe at registered brokers and investment advisers and advised them to move their funds into precious metals investments.
Metals.com has paid $1,810,807 to Texas investors as part of the rescission offer.
Other payments to investors are being made through administrative orders against registered individuals and firms.
The Securities Commissioner on Oct. 31, 2019, entered a Disciplinary Order that requires Jason Hyson LeBlanc, an investment adviser representative for Vere Global Wealth Management, to repay $366,218 to individuals who bought unsecured promissory notes he sold to fund a Fort Bend County coffee shop.
LeBlanc’s wife was a part-owner of the coffee shop, located in Fulshear. LeBlanc sold the notes while working at another firm, which fired him because he didn’t disclose the sale of notes or tell the firm he held corporate positions with the company that owned the coffee shop.
Clair Crossland, the president of LFS RIA LLC, a Dallas investment advisory firm, repaid $88,933 to clients who had purchased stream-of-income investments tied to the payouts from pensions. In the Disciplinary Order entered against Crossland, the Securities Commissioner determined that Crossland didn’t understand the complexities of the investments and the risks they posed to his clients.
Administrative orders resulted in $575,000 deposited into the general revenue fund of the State of Texas. LPL Financial paid $450,000 to Texas as part of a national settlement over the brokerage firm’s widespread regulatory failures that allowed the sale of unregistered and non-exempt equities and fixed-income securities to its clients.
In administrative sanctions, oil and gas securities and cryptocurrency-related offerings together constituted slightly more than half of the 33 orders entered.
Investigations into elder financial fraud are also increasing due to a 2017 state law requiring financial firms to report the suspected financial exploitation of a vulnerable adult.
The State Securities Board has developed a comprehensive system for reviewing, evaluating, and managing hundreds of reports, ensuring that the agency is able to quickly investigate suspected financial exploitation and protect elderly victims.