Compliance
Compliance Corner: SEC

The latest compliance news: regulatory developments, punishments, guidance, permissions and new product and service offerings.
Securities and Exchange Commission
The Securities
and Exchange Commission has charged Thomas Powell and Stefan
Toth, and their entities, Resolute Capital Partners LTD LLC and
Homebound Resources LLC, with making material misrepresentations
and omissions in connection with more than a dozen unregistered
oil and gas securities offerings.
Powell and Toth were also charged with acting as unregistered
brokers. All respondents have agreed to settle the SEC action,
the US regulator said in a statement September 24.
According to the SEC's order, between 2016 and 2019, the
respondents and salespeople acting on their behalf sold debt and
equity securities to retail investors in unregistered offerings
based on working interests in oil and gas wells.
The SEC said the respondents made “material misstatements and
omitted material facts in both debt and equity offerings.”
"Today's settlements provide important protections for investors,
including prohibiting the respondents from participating in any
oil and gas offerings for two years and requiring an independent
compliance consultant to review policies, procedures, and
offering materials for any further offerings for three years,"
Carolyn M Welshhans, enforcement division associate director,
said.
The SEC's order found that the respondents violated the antifraud
provisions and the registration provisions of the Securities Act
of 1933, and further that Powell and Toth acted as unregistered
brokers.
Without admitting or denying the SEC's findings, the respondents
agreed to a cease and desist order and to undertakings that,
among other requirements, prohibit them from participating in any
unregistered oil and gas related offerings for two years, require
them to post a referenced link to the SEC's order on all of their
websites for three years, and require an independent compliance
consultant for a period of three years.
Powell and Toth also consented to collateral and penny stock bars
and investment company prohibitions, with a right to apply for
re-entry after two years. Finally, Resolute Capital and Homebound
Resources each agreed to pay a civil penalty of $225,000, and
Powell and Toth each agreed to pay a civil penalty of
$75,000.
SEC
The SEC has paid out $36 million to a whistleblower whose
information and assistance significantly contributed to the
success of an enforcement action as well as actions by another
federal agency.
“The whistleblower provided crucial information on an illegal
scheme to the SEC's and the other agency's staffs, which included
multiple meetings and the identification of key documents and
witnesses. Under the SEC's whistleblower program, individuals who
provide critical information to other agencies may be eligible
for a related action award if they are also eligible for an award
in the underlying SEC action,” the regulator said in a statement
late last week.
So far, the regulator has awarded around $1.1 billion to 214
individuals since issuing its first award in 2012. The identities
of such persons are not disclosed.