The state has revoked the license of a Texas-based securities brokerage firm, according to the Colorado Banking and Securities Commission.
O&G Securities was sanctioned as a result of a state investigation that alleged the company was illegally offering unregistered securities to Colorado investors. One of its principals, Mary Martha Simpson, also had her license revoked.
The company operated an exclusive or “captive” broker-dealer for Champ Oil Company, a Denton, Texas, oil and gas company. O&G Securities served as the primary broker-deal for Champ Oil investments in oil and gas wells. The securities division alleges that the O&G cold called Colorado investors using a systematic method of contacting potential investors, acquiring names from marketing firms.
For example, Champ acquired the names and contact information for 3,000 accredited farmers who were men only and had 1,000 acres. In another instance, the company was offered leads on 12,500 individuals who were pre-qualified at differing prices levels, with names scrubbed against national and state do not call registries.
When O&G contacted Colorado investors, they were offered 1/32 interest in an oil and gas well for $35,000. These investors had no prior relationship with Colorado residents, and the state believes they were offering unregistered securities in Colorado.
“Cold-calling investors for private offerings of securities is a violation of the law when those securities have not been registered,” said Commissioner Fred Joseph. “Investors should always be wary of stock offerings promoted through the use of cold calling, even by a licensed firm. Contact our office to verify that securities have been properly registered before purchasing any security after a cold call. Even genuine oil and gas investments almost always bear a high degree of risk. Investors must realize the distinct possibility that they could lose their total investment in legitimate ventures.”