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

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 eight 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.”

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.