The SEC investigation no founder sees coming

I signed a settlement agreement with the Securities and Exchange Commission in 2021. The agreement included a so-called gag provision that the agency imposed on every settling party at that time. The gag provision barred me from disputing the SEC’s allegations or suggesting that its order lacked a factual basis.

This May, the SEC unexpectedly rescinded that gag rule, days before the Supreme Court was to decide whether to hear our challenge to it. The rescission is what allows me to write about this subject now.

The firm I led as CEO was never in the oil and gas business. Our niche was guiding growing companies: outsourced investor management, advice on capital structure and building the teams they need to grow.

Beginning in 2012, we served a Texas company, first in real estate and later across a series of oil and gas funds. That company sponsored and operated the oil and gas company; my firm was the manager and service provider to the investment funds. My job as CEO was to run that company, employing more than 50 professionals in legal, finance and operations. The oil and gas expertise belonged to the sponsor, never to us.

In 2016, the SEC opened what appeared to be an inquiry into certain self-directed Individual Retirement Accounts that can hold nontraditional assets, some of which may have held interests in the funds to which we were providing services. 

At first, we believed we were assisting the SEC’s investigation,........

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