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FINRA Expels Red River Securities

By Erwin J. Shustak, Esq. of Shustak Reynolds & Partners, P.C. posted on Tuesday, March 14, 2017.

Erwin Shustak, Esq.
619.696.9500 ex. 109
[email protected] 

A FINRA hearing panel has expelled Red River Securities, a Plano, Texas-based broker-dealer, and barred its CEO Brian Keith Hardwick for engaging in fraudulent sales in five oil and gas joint ventures. FINRA characterized the conduct of the firm and Hardwick as “egregious.” The FINRA panel also ordered Red River and Hardwick to pay $24.6 million in restitution to clients. One customer was a 74-year-old, self-employed farmer and dog breeder who had a $2 million net worth, liquidity of $20,000 and annual income of $150,000. The panel found, based on that liquidity and income, an investment of almost $100,000 - substantially more than half of her total annual income - in three, high risk oil and gas ventures in the course of one year to be unsuitable.

The panel found that Red River and Hardwick engaged in a pattern of misrepresentations and omissions that spanned a nearly four-year period and involved multiple sales in the risk oil and gas ventures. The oil and gas ventures, which the panel noted were already high risk, contained misrepresentations of the amount of income distributed to investors in other Regal Entity joint ventures and failed to disclose material conflicts of interest and the fact that one of the wells was a “wildcat” which entailed even greater risk.

Shustak Reynolds & Partners, p.c. focuses in the areas of securities, financial services and complex business disputes. For more information, contact our managing partner, Erwin Shustak. More information is available at www.shufirm.com.

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