U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19757 / July 10, 2006
SEC v. Deep Rock Oil Company and David W. Taylor, Defendants, Case No. CIV-06-00719-HE (U.S.D.C/W.D. Ok., Oklahoma City Division)
SEC Settles Fraud Charges With Promoter of Unregistered Securities Offering Involving Natural Gas Exploration
On July 7, 2006, the Securities and Exchange Commission filed a settled civil action in Oklahoma City federal court against David W. Taylor of Norman, Oklahoma, and his company, Deep Rock Oil Company. As part of the settlement, Taylor and Deep Rock, without admitting or denying the Commission's allegations, consented to a final judgment enjoining them from violating the antifraud and registration provisions of the federal securities laws.
The Commission charges that Deep Rock and Taylor conducted a fraudulent unregistered offering of interests in two affiliated joint ventures that were to engage in natural gas exploration and production in the Greasy Creek field in Oklahoma. The SEC's complaint details that, from mid-2002 to mid-2004, Taylor and Deep Rock employed a variety of misrepresentations and omissions to raise approximately $2.5 million from nearly 100 investors. Among other things, the complaint alleges that Deep Rock and Taylor exaggerated or fabricated Taylor's industry experience and prior success in drilling profitable natural gas wells; downplayed or concealed the substantial risks associated with the investment; and grossly overstated the success of the joint ventures' operations. According to the Commission, Taylor also failed to inform investors of his prior conviction for wire fraud and securities violations for offering fraudulent oil and gas investments during the 1950s.
The SEC's complaint alleges that Deep Rock and Taylor violated Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Deep Rock and Taylor have consented to the entry of a final judgment permanently enjoining them from violating these provisions.