SEC Charges Colorado-Based Investment Adviser with Violating Trading Rule

ADMINISTRATIVE PROCEEDING
File No. 3-22502

August 4, 2025 – The Securities and Exchange Commission today announced settled charges against Sourcerock Group, LLC (“Sourcerock”), a Denver, Colorado-based registered investment adviser, for violating an SEC trading rule when it purchased stock in a public offering of securities for six advisory clients after selling short the same stock for those clients during a period when the SEC rule prohibited that purchase.

According to the SEC’s order, Sourcerock violated Rule 105 of Regulation M of the Securities Exchange Act of 1934, which prohibits short selling an equity security during a restricted period (generally five business days before a covered public offering) and then purchasing the same security in the offering, absent an exception. Rule 105 applies regardless of the trader's intent and is designed to prevent potentially manipulative short selling before the pricing of covered secondary offerings of securities. The SEC's order finds that Sourcerock violated Rule 105 in November 2022 by purchasing an equity security for the accounts of six of its private fund clients in a covered offering after Sourcerock had sold short the same security on behalf of those clients during Rule 105’s restricted period without an applicable exception.

Without admitting or denying the findings in the SEC's order, Sourcerock agreed to cease and desist from committing or causing violations of Rule 105, and to pay a civil money penalty of $250,000.  

The SEC's investigation was conducted by J. Lee Robinson and supervised by Kimberly L. Frederick and Nicholas P. Heinke of the SEC’s Denver Regional Office. Wendy Kong of the Enforcement Division's Office of Investigative and Market Analytics assisted with the investigation. The SEC appreciates the assistance of the Financial Industry Regulatory Authority.