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Former Wilbanks Securities, Inc. Client Wins $1.378 Million FINRA Arbitration for Aztec XII Oil and Gas Program Losses

Posted on Tuesday, March 6th, 2018 at 2:44 pm    

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In February 2018, a former client of Wilbanks Securities, Inc. won an award in a FINRA arbitration for compensatory damages for $1.378 million for losses due to investments with Aztec XII Oil and Gas through Aztec Oil & Gas, Inc.

Aaron Wilbanks (CRD# 1983697) and Wilbanks Securities, Inc. were found to be jointly and severally liable for damages and ordered to pay $1,011,500 in compensatory damages plus 8% interest per annum compounded annually from February 8, 2012 until the amount plus all accrued interest is paid in full plus $334,025 in attorneys’ fees. Will Freeman (CRD# 213834) was found liable and ordered to pay $10,000 in compensatory damages plus 8% interest per annum compounded annually from February 8, 2012 until the amount plus all accrued interest is paid in full. Steven Sharpe (CRD# 2359155) was found liable and ordered to pay $20,000 in compensatory damages.

Wilbanks Securities, Inc., Aaron Wilbanks, Sharpe and Freeman were jointly and severally liable for and ordered to pay to the claimants $1,281.29 in costs, $600 as reimbursement for the non-refundable portion of the claim filing fee previously paid by Claimants to FINRA ODR, as well as $600 as reimbursement for 50% of the postponement fees associated with the January 18-22, 2016 postponed hearing dates previously paid by Claimants to FINRA ODR.

The causes of action included fraudulent misrepresentations and omissions to state material facts; liability, under the control person provisions of the Colorado Securities Act, and under the doctrines of actual, apparent, and implied authority and respondeat superior; unsuitable investment; undue concentration; breach of Respondents’ duties of due care; violations, including knowing violations, of the applicable state and federal securities laws, under the Colorado Securities Act; negligent supervision under Colorado common law, and negligence under Colorado common law; breach of WSI’s duty to supervise; and violation of the FINRA Rules of Fair Dealing, and such other legal theories which may be asserted at the hearing. The causes of action relate to the claimants’ investment in the Aztec XII Oil and Gas program. The FINRA arbitration hearing was conducted in Denver, Colorado.

Wilbanks was registered with with Wilbanks Securities, Inc. in Oklahoma City, Oklahoma from 1996 to July 2017. In December 2017, Wilbanks was suspended by FINRA after he failed to respond to FINRA request for information. Wilbanks was also the subject of two regulatory sanctions in 2006 and 2007 regarding failure to establish supervisory systems.

Freeman was registered with Wilbanks Securities, Inc. in Oklahoma City, Oklahoma from 2006 to October 2016.

Sharpe was registered with Cabot Lodge Securities LLC in Oklahoma City, Oklahoma from March to December 2017. Previously, he was registered with Wilbanks Securities, Inc. in Oklahoma City, Oklahoma from 2005 to October 2017.

Over the past few years, oil prices have significantly declined. A supply glut in 2014 and 2015 led to some of the lowest prices the market has seen in recent years. In turn, securities values also dropped, including the values of Linn Energy and many others. The volatile energy sector experienced significant turmoil, and many energy companies were negatively impacted when global crude oil prices fell below $40 per barrel at the end of 2015, including Aztec XII Oil and Gas. This was the lowest level since early 2009, as supply was in excess of global demand. Oil and gas companies experienced a spike in bankruptcies, which have left many investors reeling.

On December 30, 2011, Aztec Oil & Gas, Inc. closed the Aztec XII-A Oil & Gas LP, which only just opened on September 1, 2011. The program closed with $8.2 million of funding. Aztec Oil & Gas, Inc. and Aztec Comanche B Oil & Gas, LP filed for bankruptcy in April 2016 with $500,000 in debt.

Pursuant to FINRA Rules, member firms are responsible for supervising a broker’s activities during the time the broker is registered with the firm. Therefore, Wilbanks Securities, Inc. may be liable for investment or other losses suffered by its customers.

Erez Law represents investors in the United States for claims against brokers and brokerage firms for wrongdoing. If and have experienced investment losses, please call us at 888-840-1571 or complete our contact form for a free consultation. Erez Law is a nationally recognized law firm representing individuals, trusts, corporations and institutions in claims against brokerage firms, banks and insurance companies on a contingency fee basis.