In an article from InvestmentNews.com, June 7, 2011, Bruce Kelly writes that the litigation stemming from a series of oil and gas private placements that failed two years ago have now ensnared a giant in the clearing and custody business, National Financial Services LLC, a unit of Fidelity Investments.

The trustee overseeing the liquidation of assets of Provident Royalties LLC, which the Securities and Exchange Commission charged with fraud in 2009, last month requested that a federal judge in Dallas issue a subpoena to National Financial. In the court filing, the trustee wants access to retirement account documents of clients of four broker-dealers that sold preferred stock of Provident and used National Financial as a clearing firm.

Bruce Kelly writes that dozens of broker-dealers sold the Provident offerings from September 2006 to January 2009, raising $485 million. Regarding National Financial records, the trustee wants documents of 579 clients who bought $39.1 million of Provident from four firms: J.P. Turner & Co. LLC, Milkie/Ferguson Investments Inc.,National Securities Corp. and Securities America, Inc.

A spokesman for National Financial, said the firm typically does not comment on matters involving its correspondent clearing, broker-dealer clients. Clearing firms do not sell securities but rather hold them for broker-dealers and their clients.

The InvestmentNews.com article goes on to say that calling Provident a “massive Ponzi scheme,” the trustee claimed that the “trustee is entitled to information concerning the relationship between the broker-dealers and their respective clearing houses, and how those funds were transferred, paid for and accounted for by the clearing houses,” the court filing stated.

“As custodial fiduciary, [National Financial] should have agreements with the various broker-dealers they did business with and records for every dollar that went through their controlled account,” according to the filing.

Last year the trustee sued dozens of broker-dealers to claw back revenue and commissions from the sale of Provident.

If you feel you have been an alleged victim of these or other broker-dealers and were sold Provident Royalties private placements, call a Securities Arbitration Lawyer for a free consultation on how to potentially recover your losses.  To speak with an attorney, call 888-760-6552, or visit www.stockmarketlawsuit.com.

Soreide Law Group, PLLC., representing investors nationwide before FINRA  the Financial Industry Regulatory Authority.

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Source: U.S. Bankruptcy court filings, Northern District of Texas, case # 09-33886

If you feel you have been an alleged victim of these broker-dealers and were sold Provident Royalties private placements, call a Securities Arbitration Lawyer for a free consultation on how to potentially recover your losses.  To speak with an attorney, call 888-760-6552, or visit www.stockmarketlawsuit.com. Soreide Law Group, PLLC., representing investors nationwide before FINRA  the Financial Industry Regulatory Authority.

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Soreide Law Group, PLLC, wants to speak with you about your Capital Financial private-placement investments. Call 888-760-6552.  Recently, it has been reported that Capital Financial Services Inc., with 332 representatives, sold Provident Royalties LLC, preferred stock from 2006 to 2009, according to an SEC cease-and-desist order. Capital Financial brokers also sold $63 million of the offerings by Provident, which the SEC charged with fraud in 2009. The reps received an 8% commission — or $5 million — for selling the Provident deals. The firm collected a 1% due diligence fee, or $600,000. Capital Financial also sold $100 million of private placements for Medical Capital Holdings Inc. Medical Capital has also been charged with fraud.

“Capital Financial never conducted independent verification of any of the offering materials provided by Provident,” the SEC stated in its order, which it issued April 6.

The broker-dealer “also never received audited or even unaudited financial statements for any of the Provident offerings,” the SEC said. “The only financial information Capital Financial received regarding Provident was an unaudited consolidated balance sheet review.”

“Capital Financial failed to disclose to customers that although it was collecting a due diligence fee, it was not conducting any due diligence,” the SEC order stated. When in fact, the firm collected the $600,000 as a due diligence fee but incurred no expenses to match the fee, the SEC alleged. “At no time did Capital Financial hire independent counsel, an accounting firm, contact third parties regarding Provident’s business, or hire consultants to review the Provident offerings,” the SEC alleged.

If you bought private placements, including but not limited to, Provident Royalties LLC, Medical Capital Holdings, Inc., or Capital Financial Services, Inc., Attorney Lars Soreide, of Soreide Law Group, PLLC, would like you call a Securities Arbitration Lawyer for a free consultation on how to recover your investment losses.  To speak with an attorney, call 888-760-6552, or visit www.stockmarketlawsuit.com.

Soreide Law Group, PLLC., representing investors nationwide before FINRA  the Financial Industry Regulatory Authority.

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Another article from Bruce Kelly of InvestmentNews.com, March 21st., 2011, says that Ameriprise Financial Inc. is taking preliminary steps to help its beleaguered independent broker-dealer subsidiary, Securities America, Inc.

This past Friday, Securities America’s chief financial officer, Kelly Windorski, testified in a federal court in Dallas that the firm could go bust if a federal judge did not approve a $21 million class action settlement. The judge rejected the settlement later in the day.

This class action is part of a litigation that Securities America is facing after its brokers sold $400 million in private placements from 2003 to 2009 that are now in default. The firm has almost $9 million in excess net capital on hand.

Kelly goes on in his article that it’s been widely debated in the industry whether Securities America’s corporate parent, Ameriprise, will step in and infuse the firm with cash. At the moment, the brokerage has dwindling resources, is spending $2 million a month on lawyers and could be in danger of violating its net-capital requirement if it suddenly loses a handful of arbitration claims investors have brought against the firm over allegedly bad private placements. Securities America’s statement gave no specifics about how much money Ameriprise would be willing to contribute to the firm, but a Securities America spokeswoman said the parent company has reached out to the beleaguered firm.

“Ameriprise has reached out to us to determine whether it can help the parties find a reasonable resolution for all constituents,” wrote Janine Wertheim, a spokeswoman for the broker-dealer, which has about 1,800 reps and advisers. “We hope to develop a process in the coming days that would facilitate exploration of such a resolution and to have a good sense by the end of the week.”

“While Ameriprise Financial has no obligation to participate in Securities America’s settlement discussions, we have reached out to Securities America to determine if we can help the parties find a reasonable resolution to all constituents,” Ameriprise said in a statement published on its investor relations website.

 Ameriprise said in its annual report that it was setting aside $40 million in reserves due to legal actions stemming from brokers at Securities America selling private placements of Medical Capital Holdings Inc. and Provident Royalties LLC. These were sold by dozens of independent broker-dealers in the last decade, the two series of private placements went into default in 2009 and the sponsor companies were later charged with fraud by the SEC. Securities America was by far the largest seller of Medical Capital notes, with brokers selling about $700 million of the product.

The InvestmentNews article said that Ameriprise previously had reached a proposed $28 million settlement with the class action plaintiffs suing Securities America. That proposed settlement is a separate fund from Securities America’s.

Federal Judge W. Royal Furgeson Jr. temporarily halted three arbitration claims from investors suing Securities America in order to weigh Securities America’s $21 million proposed settlement last month. Under the terms of that deal, the arbitration claims would have been rolled into the class action. Mr. Furgeson’s decision pushes one of two class actions, Billitteri v Securities America, et al., back to where it originated in U.S. District Court in the Central District of California. The case was moved to Dallas and landed before Mr. Furgeson this winter because he is overseeing the class action claim against Securities America and other broker-dealers that sold Provident Royalties investments.

If you feel you have been a victim of the alleged broker-dealer private placement  schemes of  Securities America Financial, Inc., Ameriprise Financial Inc ., Medical Capital Holdings, Inc., or any other broker-dealer, call a Securities Arbitration Lawyer for a free consultation on how to recover your losses.  To speak with an attorney, call 888-760-6552, or visit www.stockmarketlawsuit.com. Soreide Law Group, PLLC., representing investors nationwide before FINRA  the Financial Industry Regulatory Authority.

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In a March 18th., 2011, article in InvestmentNews by Bruce Kelly, he writes that Securities America Financial Inc. could go out of business if a $21 million lawsuit against the brokerage firm isn’t settled at an agreed-on amount.

The article states that according to Kelly Windorski, the independent broker-dealer’s chief financial officer, the firm could go bust if a federal judge does not approve the class action settlement. Mr. Windorski made the statement while testifying in federal court in Dallas this morning.

The CFO, Mr. Windorski, told U.S. District Court Judge W. Royal Furgeson Jr. that if the judge does not approve the settlement, it could mean the end of the firm, according to three attorneys who represented individual investors suing Securities America.

Janine Wertheim, a Securities America spokeswoman, did not return calls seeking comment from InvestmentNews.

The article goes on to say that from 2003 to 2008, Securities America sold $400 million of private placements that are in default. The firm sold nearly $18 million of Provident Royalties, for example, according to court filings. Dozens of investors have subsequently sued the firm seeking damages.

“‘End of the firm’ was the sum and substance of” Mr. Windorski’s testimony, said John Chapman, a plaintiff’s attorney who represents 70 Securities America investors with claims for losses totaling about $25 million.

Mr. Windorski said that, if a settlement was not approved, the firm would go out of business soon, due to defense costs and arbitration awards.

Today’s hearing in U.S. District Court in Dallas was part of a process of determining whether Securities America clients who lost money on soured Reg D offerings could continue their individual lawsuits against the firm or be required to drop those claims and become part of a class action. That class action also involves Ameriprise Financial, Securities America’s parent. Ameriprise said recently it had reached a $28 million preliminary settlement with the class plaintiffs.

Kelly goes on to say that the firm had 1,923 reps, as of Sept. 30, 2010, and generated over $400 million in annual revenue in 2009. The firm ranks as the 17th largest independent broker-dealer, according to the InvestmentNews B-D Data Center.

If you feel you have been a victim of the alleged broker-dealer private placement  schemes of  Securities America Financial, Inc., Ameriprise Financial Inc ., or any other broker-dealer, call a Securities Arbitration Lawyer for a free consultation on how to recover your losses.  To speak with an attorney, call 888-760-6552, or visit www.stockmarketlawsuit.com. Soreide Law Group, PLLC., representing investors nationwide before FINRA  the Financial Industry Regulatory Authority.

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In a March 2, 2011, article from Investment News, Bruce Kelly writes that Ameriprise Financial Inc. has reached a $27 million settlement with investors who bought private placements that have gone bust from reps at its independent broker-dealer subsidiary, Securities America Inc., according to an attorney with knowledge of the matter.

Securities America is also being sued by securities regulators from Massachusetts and Montana but the status of those suits is not clear in the light of the proposed settlements. Mr. Furgeson will hold a hearing in federal court in Dallas on the proposed settlements on March 18. Lawyers for the plaintiffs in arbitration plan to argue vigorously against any settlement that would freeze investors’ arbitration claims against Securities America.

The InvestmentNews article states that the proposed settlement, which must be approved by a federal judge later this month to become final, comes two weeks after Securities America reached a $21 million potential settlement with the class action plaintiffs who sued Securities America and Ameriprise in 2009.

The article goes on to state that in one allegation from the suit, C. Richard Toomey, et al. v. Securities America Inc., et al, plaintiffs claimed that Securities America handed private placement memorandum to clients that contained untrue statements about the deals and omitted other material information about the deals.

This is all part of a labyrinth of litigation before federal judge W. Royal Furgeson Jr. in Dallas, stemming from dozens of independent broker-dealers, including Securities America, selling two series of private placement deals that have left investors with tens of millions of dollars of losses.

The Securities and Exchange Commission charged both Medical Capital and Provident Royalties with fraud in 2009.

Chris Reese, a spokesman for Ameriprise, said on Wednesday evening he could not confirm or deny the settlement. In its annual report earlier this week, Ameriprise said Securities America clients were facing almost $400 million in losses from the Medical Capital and Provident investments, and the firm also said it had set aside about $40 million in legal reserves for the claims.

It was noted that a key part of the potential Securities America settlement is the fact that it requires investors who have sued the firm through arbitration under the Financial Industry Regulatory Authority Inc. will have those claims halted. Investors would become part of the class. This has infuriated some investors, along with their attorneys, who want their claims to go forward through arbitration with hopes of winning 100 cents on the dollar, plus the potential for damages.

The firm was dealt a costly legal blow on New Year’s Eve when a Finra arbitration panel awarded almost $1.2 million in damages and legal fees to a client who sued the firm and a broker over the sale of Medical Capital private placements. The award included $250,000 in punitive damages.

“A class action settlement treats everyone fairly,” Mr. Girard said. He added that some plaintiff’s attorneys representing clients in Finra arbitration have a “conflict of interest” over the matter because they have clients at the front and the back of the long line of litigation against Securities America. Those at the back of the line run the risk of getting nothing if the firm runs out of money, he said.

InvestmentNews states that threat is substantial. Small to mid-sized independent broker-dealers that sold high risk private placements have gone out of business due to lawsuits and legal costs over the past two years. None have been as substantial as Securities America, which has about 1,800 reps and advisers who generated about $500 million in fees and commissions last year.

If you feel you have been a victim of the alleged broker-dealer private placement fraudulent schemes of  Ameriprise Financial Inc ., Securities America, Inc., or any other broker-dealer, call a Securities Arbitration Lawyer for a free consultation on how to recover your losses.  To speak with an attorney, call 888-760-6552, or visit www.stockmarketlawsuit.com. Soreide Law Group, PLLC., representing investors nationwide before FINRA  the Financial Industry Regulatory Authority.

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Yesterday, Bruce Kelly’s article from InvestmentNews stated that National Securities Corp. is the latest broker-dealer to face disciplinary action from Finra over the sale of private placements gone bust.

According to National Securities’ profile on Finra’s BrokerCheck system, the firm received a Wells notice last month from the Financial Industry Regulatory Authority Inc. A Wells notice indicates that the regulator intends to bring an enforcement action against an individual or a firm.

Kelly goes on to say that National Securities reps sold investors about $3.7 million of notes issued by Provident Royalties LLC, according to the latter’s bankruptcy court filings. The Regulation D offering from Provident involved a series of oil and gas private placements that the Securities and Exchange Commission in 2009 claimed were fraudulent,Mark Roth, the firm’s general counsel for National Holdings Corp., the parent of National Securities, did not return phone calls Tuesday seeking comment.

In the Investment News article they say that National Securities received the Wells notice regarding violations of product suitability rules, e-mail supervision rules, and standards of commercial honor and principles-of-trade rules, according to the BrokerCheck report. The product mentioned in the report was a “private placement.”

The Finra officials have made broker-dealers’ sale of private placements that failed during the market collapse their No. 1 enforcement priority this year.

Broker-dealers have begun to feel the pinch. Workman Securities Corp. this month reached an agreement with Finra to pay $700,000 for partial restitution to more than a dozen clients who had sued the firm over investments in Medical Capital Holdings Inc. and Provident Royalties. Like Provident, the SEC charged Medical Capital with fraud in 2009.

In a meeting of brokerage executives this month in Phoenix, James Shorris, executive vice president and executive director of enforcement with Finra, said Reg D private placements and non-traded real estate investment trusts are listed as the first and second areas of focus for Finra, respectively.

If you feel you have been a victim of the alleged broker-dealer private placement fraudulent schemes of  the brokerages listed above , National Securities Corp., Medical Capital Holdings, Workman’s Securities Corp.,or Provident Royalties,call a Securities Arbitration Lawyer for a free consultation on how to recover your losses.  To speak with an attorney, call 888-760-6552, or visit www.stockmarketlawsuit.com. Soreide Law Group, PLLC., representing investors nationwide before FINRA  the Financial Industry Regulatory Authority.

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In an article in IvestmentNews by Bruce Kelly he writes how scores of broker-dealers were bruised and battered last year, with dozens of small and midsize firms closing their doors amid desperate — and mostly futile — searches for much-needed capital.

The number of broker-dealers, through November, registered with the Financial Industry Regulatory Authority Inc. was 101 below the total at the end of 2009. Since 2005, the broker-dealer community has shrunk by 9% to 4,619. 

By the end of 2009, there were 175 fewer broker-dealers registered with Finra than a year earlier, the self-regulatory agency’s records show. And by the end of 2008, there were 110 fewer than a year earlier.

Even though the steady decline in the net number of broker-dealers is evident in statistics on Finra’s website, the regulator does not detail how many new broker-dealers are registered each year, making it impossible to determine with accuracy how many firms open or close their doors in a given year.

Giant firms have no interest in serving small businesses or small retail investors, some executives said. Owners and executives of small broker-dealers contend that a decline in the number of firms is damaging to the economy and to small investors. Many of these broker-dealers act as engines for local investment banking deals. Small firms also are willing to work with retail investors with small amounts of money — $100,000 for example.

“I’ve been in the business for 45 years and nothing has ever come close to the carnage that’s occurred in our industry,” said Ron Kovack, chairman of Kovack Securities Inc.

Kovack pointed to two types of firms that have recently run aground and been forced to shut down. Some simply cut corners during tough times, leading to bad business practices. Others were shuttered due to minor rule violations that led to staggering legal costs arising from lawsuits and arbitration claims.

“From the number of calls I’m getting from other small-broker-dealer owners, people are getting out,” said Alan Davidson, chief executive of Zeus Securities Inc. and president of the Independent Broker-Dealer Association Inc., an industry group with 250 broker-dealer members.

THE BAD CLIMATE

Davidson goes on to say that regulatory pressures and business conditions — including rising fees and assessments — are pushing broker-dealers to the brink. “The membership is under attack and small firms are taking the brunt,” he said. Mr. Davidson added that according to his research, the number of firms that closed in the past few years totaled 20% of the Finra membership.

In 2010, the net-capital requirements tripped up a number of firms.

Securities and Exchange Commission requires broker-dealers to maintain a certain amount of net capital at all times. The levels, however, vary widely from firm to firm, with many small firms required to have as little as $5,000. Once a firm fails to meet its required net-capital level, it’s at death’s door.

There were two high-profile firms  closed this year due to such violations. GunnAllen Financial Inc., which had been one of the fastest-growing independent broker-dealers of the last decade and at one time boasted 1,000 affiliated registered representatives, was closed in March. Then in June, Jesup & Lamont Securities Corp., a Wall Street mainstay whose corporate lineage dates back to the 19th century, closed due to net-capital violations. At the time the firms closed, GunnAllen had about 500 reps and Jesup & Lamont 300.

So expect more failures and closings this year, industry observers said. “It’s been a horrible market and firms are thinly capitalized,” said Larry Papike, president of Cross-Search, a recruiting firm specializing in independent reps and executives at such firms.

“And then there’s the limited-partnership debacle,” he said, referring to the cascade of lawsuits and arbitration complaints that numerous independent broker-dealers face in the wake of SEC fraud charges against Medical Capital Holdings Inc. and Provident Royalties LLC.

There were dozens of independent broker-dealers sold allegedly bogus private-placement offerings from those firms and now face potential class actions, arbitration complaints from investors, and even lawsuits from receivers in bankruptcy proceedings looking to claw back commissions from broker-dealers.

Liabilities from Medical Capital and Provident sales contributed to the demise of some of the broker-dealers that closed this year. That group includes Okoboji Financial Services Inc., a leading seller of Provident Royalties private placements, which closed last May.

The firm Cullum & Burks Securities Inc., which was heavily involved in the sale of Medical Capital private placements, also shut its doors in 2010.

Call a Securities arbitration lawyer for a free consultation on how to recover your losses.  To speak with an attorney, call 888-760-6552, or visit www.stockmarketlawsuit.com. Soreide Law Group, PLLC., representing investors nationwide before FINRA  the Financial Industry Regulatory Authority.

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SHERMAN, Texas –  It was reported September 1, 2001, in the North Texas eNews from an article by the US Department of Justice, that a 35-year-old Dallas man has pleaded guilty for his role in a multi-million dollar oil and gas scheme in the Eastern District of Texas, announced U.S. Attorney John M. Bales today.

 Joseph Blimline, it was announced, pleaded guilty to an Information charging him with conspiring to defraud investors in an oil and gas scheme that involved over $485 million and 7,700 investors throughout the United States.  Blimline  also pleaded guilty to defrauding investors in a second oil and gas scheme based in the state of Michigan that involved over $50 million obtained from investors.  He entered his pleas today before U.S. Magistrate Judge Amos Mazzant.

U.S. Attorney Bales highlighted the nature of the fraud scheme, “Victims from across the country relied upon the representations made in the scheme before investing their hard-earned money into what they believed to be a vibrant opportunity.  Investment fraud is, at its core, a betrayal of trust by one person to another.  We will be relentless in our pursuit of those individuals responsible for abusing the trust of others in order to obtain criminal profits.”

Beginning in September of 2006, Blimline and other individuals, operating as representatives of Provident Royalties, made materially false representations and failed to disclose material facts to their investors in order to induce the investors into providing payments to Provident.  Among these false representations were statements that funds invested would be used only for the oil and gas project for which those funds were raised; among the omissions of material fact were the facts that Blimline was a control person over Provident, Blimline received millions of dollars of unsecured loans, Blimline had been previously charged with securities fraud violations by the state of Michigan, and that funds from investors in one oil and gas project were being used to pay individuals who invested in previous oil and projects.

The report added that in the second scheme, according to information presented in court, between November 2003 and December 2005, Blimline and other individuals falsely promised inflated rates of return in order to obtain payments from investors, which they then used to make payments to previous investors.

This law enforcement action is part of President Barack Obama’s Financial Fraud Enforcement Task Force.

It is noted that President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.

Joseph Blimline faces up to 20 years in federal prison on each of the two conspiracy charges.  A sentencing date has not been set.

The US Department of Justice reports that this case is being investigated by the FBI and is being prosecuted by Assistant U.S. Attorney Shamoil Shipchandler.

This information was reported in the North Texas eNews.

If you are a victim of the alleged fraudulent schemes of  Joseph Blimline or Provident Royalties, call a FINRA Securities arbitration lawyer for a free consultation on how to recover your losses.  To speak with an attorney, call 888-760-6552, or visit www.stockmarketlawsuit.com. Soreide Law Group, PLLC., representing investors nationwide before FINRA and the NFA.

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FINRA Continues Nationwide Initiative Investigating Broker-Dealers Engaged in Private Placements

Washington, D.C. — The Financial Industry Regulatory Authority (FINRA) announced today that it has expelled Provident Asset Management, LLC, a Dallas-based broker-dealer, for marketing a series of fraudulent private placements offered by its affiliate, Provident Royalties, LLC, in a massive Ponzi scheme.

 The action announced today is the first produced by a FINRA initiative involving active examinations and investigations of broker-dealers involved in retail sales of private placement interests, as well as the broker-dealers affiliated with private placement issuers. FINRA is looking at firms’ compliance with suitability, supervision and advertising rules, as well as potential instances of fraud. The initiative was undertaken in response to an increase in investor complaints involving private placements and Securities and Exchange Commission actions halting sales of certain private placement offerings.

 Provident Asset Management misrepresented to investors that the funds raised through the offerings would be used to purchase interests in the oil and gas business, including exploration activity and the acquisition of real estate, oil and gas leases and mineral rights. In fact, investors’ funds were commingled and used by an affiliated issuer to make dividend and principal payments to other investors. In addition, the firm also acted as the agent in an oil and gas private placement offering but failed to establish an escrow account for investors’ funds during the contingency period of the offering.

“Provident facilitated the sale of a series of fraudulent private placements that were marketed to unsuspecting customers as income-producing investments, when it was simply using new investors’ money to pay previous investors the promised dividends – a classic Ponzi scheme,” said Susan L. Merrill, FINRA Executive Vice President and Chief of Enforcement. “While the private placement market is an important source of capital for many companies, the market is also one in which investors have been subject to unsuitable or abusive sales tactics.”

 FINRA found that from September 2006 through January 2009, Provident Asset Management marketed and sold the preferred stock and limited partnership interests in a series of 23 private placements offered by Provident Royalties, LLC. Provident Asset Management’s only business line was acting as the wholesaling broker-dealer for the Provident Royalties’ offerings, which were sold to customers through more than 50 retail broker-dealers nationwide, raising over $480 million through approximately 7,700 individual investments made by thousands of investors.

 FINRA’s broader investigation into broker-dealers that sold the Provident and other troubled private placement offerings is continuing.

 The Provident Royalties private placement memoranda promised investors returns of up to 18 percent per year and said the funds raised through each offering would be used to purchase interests in all aspects of the oil and gas business.

 In an effort to market the Provident Royalties offerings, the firm falsely represented that: investors’ funds would be used by each individual Provident Royalties offering to purchase interests in the oil and gas business for that offering; the subscription proceeds of each offering would be deposited into an account for that offering and become assets for that offering; approximately 86 percent of the subscription proceeds would be allocated to acquiring interests in the oil and gas business; and, dividends paid to investors would be derived from revenues, primarily from the sale of oil and gas assets.

The Provident Royalties private placement memoranda promised investors returns of up to 18 percent per year and said the funds raised through each offering would be used to purchase interests in all aspects of the oil and gas business.

In fact, Provident Royalties deposited the investors’ funds from each offering into a separate bank account. Then, in the fashion of a classic Ponzi scheme, the money was either moved freely from one account to another or was swept into one of Provident Royalties’ operating accounts and used to pay dividends and principal to earlier investors.

 On July 2, 2009, the SEC filed a civil injunctive action in the Northern District of Texas naming Provident Asset Management, Provident Royalties and others, seeking a temporary restraining order and an emergency asset freeze and appointment of a federal equity receiver to take control of the entities and preserve their assets for the benefit of the defrauded investors.

 In concluding this settlement, Provident Asset Management neither admitted nor denied the charges, but consented to the entry of FINRA’s findings.

If you feel you have a claim against Provident Asset Management or Provident Royalties and would like to be represented in an arbitration with FINRA, contact  a lawyer at Soreide Law Group at:  www.stockmarketlawsuit.com or call (888) 760-6552.

Financial Industry Regulatory Authority · FINRA · fraud · Ponzi scheme · Provident Asset Management · Provident Royalties · Securities and Exchange Commission