Investor Justice Clinic

SEC Warns Investors of Fraudulent Private Oil and Gas Offerings


The SEC’s Office of Investor Education and Advocacy recently issued an alert warning investors of potentially fraudulent activity involving private offerings of securities for oil and gas ventures.[1]

The number of fraud cases regarding these commodities has risen in recent years and the SEC and the states have brought charges in several cases involving "great opportunities" that turned out to be scams.

Before investing in a private oil and gas offering, the SEC encourages individuals to consider who is asking you to invest and whether the investment is right for you.  It is also important to make sure that the person offering to sell you the securities is a registered broker and a member of FINRA.  A registered broker, not connected with the offering, can help you objectively analyze the investment and will provide you with certain legal protections.

The SEC's alert also cautions investors about indicators of potential scams. According to the SEC, one common thread among fraudulent schemes, including those related to oil and gas, are claims that they are about to strike it rich, or that returns are guaranteed. Investors should always be skeptical of high return low risk sales pitches.

Investors should also be aware that privately offered securities have limited liquidity and can be difficult or impossible to resell.  Before committing to a privately offered oil and gas venture, the SEC urges investors to ask certain questions and not to invest unless they are satisfied with the answers.  Consider inquiring as to the company’s track record in the industry and how the proceeds of the investment will be used. Do your own research and, if necessary, consult an independent specialist in oil and gas.

If you believe you have invested in a fraudulent oil and gas private offering, please contact USF’s Investor Justice Clinic at or (415) 422-5326 for a free case evaluation.

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