Texas Regulators Issue Cease & Desist Vs. Balanced Energy and Kirk Johhnson

Texas Regulators Issue Cease & Desist Vs. Balanced Energy and Kirk Johhnson 150 150 Rex Securities Law

By Robert H. Rex, Esq. 

On March 10, 2014, John Morgan, Securities Commissioner for the Texas State Securities Board (TSSB) issued an Emergency Cease and Desist Order against Southlake, Texas, company Balanced Energy, LLC, and Kirk Johnson, its president. 
Balanced Energy claims that it is the first company in the oil and gas exploration and production industry to accept Bitcoin as payment for its prospects. 
 According to the Order, which may be accessed here, Balanced Energy is offering for sale working interests in wells in the South Runway Prospect in Runnels County, Texas, and are advertising the sale of these investments on a webpage and social media that is accessible by the general public. The working interests being offered have not been registered for sale in Texas. 
The TSSB cites the fact that Regulation D of the Securities  Act of 1933 only permits an issuer to engage in general solicitation without complying with state registration, provided that , among other things, all purchasers of the securities are accredited investors and that the issuer take  reasonable steps to verify that such purchasers are accredited investors. The TSSB  found that Balanced Energy was offering its investments to non accredited investors, is taking no steps to verify that investors are accredited and that Johnson is claiming that “we don’t do any verification” and “we’re not going to play paperwork police.”
In connection with the sale of working interest in the South Runway Prospect TSSB found that Balanced Energy and Johnson are intentionally failing to disclose any material facts related to the nature of the risks associated with the investments. 
The TSSB concluded that the sale of the investments are securities as defined by Section 4A of the Texas Securities Act, that Balanced and Johnson violated the Texas Securities Act and are engaging in fraud in connection with the offer for sale of securities. 
If you have questions about losses in your brokerage account or feel that you are a victim of negligence or fraud, call to speak with an experienced securities attorney. 

Rex Securities Law , with offices in Boca Raton, FL,  and  Austin, TX,   provides representation to  investors  nationwide who are seeking recovery of investment losses due to the negligence or fraud of stockbrokers and broker dealers. If you have questions about how your account has been handled, call to speak with an experienced securities attorney.

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