SEC Charges Unregistered Sales Agents for Improperly Soliciting Investments in Oil and Gas Ventures
Litigation Release No. 24234 / August 13, 2018
Securities and Exchange Commission v. Alexander Charles White and Paul Douglas Vandivier, No. 18-cv-61870 (S.D. Fla. filed August 13, 2018)
On August 13, 2018, the Securities and Exchange Commission filed a civil injunctive action against two sales agents for unlawfully acting as unregistered brokers and selling unregistered investments in two oil and gas companies based in Texas.
The SEC's complaint, filed in the U.S. District Court for the Southern District of Florida, alleges that Alexander Charles White and Paul Douglas Vandivier illegally solicited and raised money from investors for Aegis Oil, LLC and 7S Oil & Gas, LLC. Both of these companies offered and sold unregistered securities in the form of "joint venture units" in oil and gas development projects located in Texas.
According to the SEC's complaint, White managed a marketing team that solicited investors for Aegis and 7S. White and his sales team made cold calls to potential investors using investor contact lists. In return, White was paid transaction-based compensation in the form of a 35% sales commission for each investor his team brought on in the Aegis offering and a 28% to 35% commission for each investor in the 7S offering. In total, White received commission payments of about $6.84 million from the Aegis offerings and $229,000 from the 7S offerings. White paid out a portion of those proceeds to his sales team.
The SEC's complaint also alleges that Vandivier managed a sales team that solicited investors for the offerings through his now defunct company, Aegis Marketing, Inc. Vandivier and his marketing team located investors through investor contact lists. Vandivier received commission totaling about $870,000 from the Aegis offerings, a portion of which he paid out to his sales team, and $23,000 from the 7S offerings.
The SEC's complaint charges White and Vandivier with violating Sections 5(a) and 5(c) of the Securities Act of 1933, and Section 15(a)(1) of the Securities Exchange Act of 1934. The SEC is seeking permanent injunctions, disgorgement plus prejudgment interest, and civil penalties against White and Vandivier.
The SEC's investigation was conducted by Raynette R. Nicoleau, Shan Chang, and Crystal Ivory in the Miami Regional Office, and supervised by Chedly C. Dumornay. The litigation will be led by Russell Koonin.