The Financial Industry Regulatory Authority (FINRA) has expelled Sandlapper Securities, LLC, from the securities industry based on FINRA findings that the firm willfully defrauded investors by charging unreasonable and undisclosed markups on sales of fractional interests in saltwater disposal wells in violation of the Securities Exchange Act. The firm, along with its president and CEO, Jack Charles Bixler, and Trevor Lee Gordon, were ordered to pay over $3.3 million, plus interest, to customers in restitution for defrauding an investment fund. Bixler and Gordon were permanently barred from the securities industry.
According to FINRA’s findings, Bixler and Gordon formed Tiburon Saltwater Reclamation Fund I (“TSWR Fund”) to invest in saltwater disposal wells operated in the Permian Basin in Texas. Bixler, Gordon and associates owned and controlled the fund’s manager, served as the fund’s investment committee, and made all investment decisions for the fund. Investors purchased units in this fund for about $12.5 million.
Bixler, Gordon, and their associates also created TSWR Development to acquire the saltwater well interests and resell them to investors. The purchase of these interests was the primary reason for the development company’s existence. TSWR Development positioned itself squarely in the middle of each transaction, for no other reason than to profit from the price difference in the transactions.
The FINRA findings state that:
- Bixler and Gordon breached their fiduciary duties to the fund by causing the development company to usurp opportunities to purchase lower-priced well interests and by forcing it to purchase those interests at excessively high markups, in violation of FINRA Rules.
- the firm and Gordon defrauded FINRA through violations of FINRA rules; federal securities laws, rules and regulations; and the rules of the Municipal Securities Rulemaking Board (MSRB).
- Gordon sold saltwater disposal well interests to retail customers through a network of representatives while marketing the investments as real estate, fraudulently interposing the development company into the transactions, and charging undisclosed and excessive markups in willful violation of Section 10(b) of the Securities Exchange Act of 1934, Rule 10b-5, and FINRA Rules 2020 and 2010.
Gordon and Bixler failed to register TSWR Development as a dealer with the Securities and Exchange Commission (SEC) or as a FINRA member. (FINRA Case #2014041860801)
Despite these substantial conflicts of interest, FINRA found that Sandlapper Securities and Gordon knowingly allowed its officers to sell well interests marketed as real estate to retail investors and receive selling compensation without any supervision.
If you or someone you know lost money as a customer of Sandlapper Securities, Jack Charles Bixler, Trevor Lee Gordon, or as an investor in the Tiburon Saltwater Reclamation Fund, please call the Frankowski Firm at 888.741.7503 or fill out this contact form.