The Texas Securities Commissioner, Travis J. Iles, recently entered several administrative orders. The orders touch on all agency programs – Enforcement, Registration, and Inspections & Compliance – and represent fair and measured regulatory outcomes designed to protect Texas investors and businesses.
Enforcement – Agreed Order Finding Securities Fraud & Registration Violations
Raymond Leslie Boykin and his company, US Energy Assets, agreed to the entry of an Order concluding that they committed securities fraud and securities registration violations in connection with an oil and gas investment. They represented they will forever refrain from committing these violations. The Order recognizes Boykin and US Energy Assets misled investors about the profitability and regulatory oversight of US Energy Assets, among other things.
This is not Boykin's first time censured by a regulatory agency. Boykin was previously registered with the Financial Industry Regulatory Authority (FINRA), who suspended Boykin for two years for misappropriating confidential client data. Boykin’s past regulatory history was not disclosed to prospective US Energy Asset investors, a fact acknowledged in the Agreed Order.
Registration – Order Denying Registration
Anthony DePasquale and his firm, Elysien Private Wealth, sought investment adviser registrations in Texas. The applicants were previously the subjects of disciplinary actions in Nevada and Oklahoma, including a revocation of license and permanent bar from industry. The registration applications were denied.
Inspections – Registered Firm Agrees to Disciplinary Order & Fine
Texas Securities Commissioner, Travis J. Iles, also entered a disciplinary order reprimanding LPL Financial, LLC and assessing a $125,000 fine against the firm for failing to enforce its written supervisory procedures relating to prohibitions on retail investor communications. During the relevant time period, LPL had an email surveillance tool which was not designed to flag emails sent to more than twenty-five individuals when those individuals were included only by blind carbon copy (BCC).
A former agent of the firm solicited sales of over $65,000,000 in structured notes using blast emails to generate interest in the product by BCC-ing recipients. The firm also failed to enforce its written supervisory procedures that sales of structured products be suitable, since certain investors in the structured notes had limited investment experience. Some of these investors invested over 40% of their investable assets in the notes. The disciplinary order against LPL also includes an undertaking whereby LPL agreed to offer to repurchase outstanding structured notes form certain clients of the former agent. Since this conduct occurred, LPL has implemented a new, more robust e-mail surveillance tool that incorporates BCC recipients in connection with the detection of unapproved retail communications. The agency recognizes and appreciates LPL's cooperation in the investigation and resultant resolution.
Enforcement – Order Affirming Prior Order & Ordering Refunds to Investors
On November 20, 2020, the Securities Commissioner entered an Emergency Cease and Desist Order, Order No. ENF-20-CDO-1827, against KP Financials, LLC, Kevin Vu Pham, Daniel Ajwani, and Gerald Johnson (Respondents). Respondents challenged the entry of the Order.
The October 27, 2022, Order affirmed the emergency order, including its findings that Respondents violated the registration and anti-fraud provisions of The Securities Act. The Order also requires Respondents to refund monies received from aggrieved investors.