SEC Alleges Fraud from Unregistered Offerings of Oil and Gas Securities

On May 12, the Securities and Exchange Commission brought a lawsuit in the US District Court for the Northern District of Texas, alleging that between September 2010 and January 2012, Charles Couch, directly and through his company, Couch Oil & Gas, raised approximately $9.8 million from investors in two unregistered offerings of oil and gas securities. According to the SEC, defendants made false representations to investors in brochures and other documents, including the promise to use all funds to drill and complete wells. The SEC alleged that, contrary to the defendants’ representations, defendants spent only 35% of investors’ funds on costs associated with drilling and used almost 30% of the funds to pay sales commissions to unregistered brokers. The SEC charged defendants with violating 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 10(b) thereunder. It seeks disgorgement of profits, civil penalties and an injunction preventing defendants from future violations.

Securities and Exchange Commission v. Charles Couch and Couch Oil & Gas, Inc., C.A. No. 3:14-cv-01747-D (N.D. Tex. May 12, 2014).


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