Source Capital Group, Inc.— Allowance of Control over Firm Operations

New Orleans investment fraud attorneySource Capital Group, Inc. Allegedly Permitted Principals of Issuers of Securities Sold by SCG – Blue Ridge and Four Bayou City – to Supervise the Firm’s Registered Personnel and to Assert Control Over Source’s systems, operations and activities

Source Capital Group, Inc. allegedly permitted the principals of issuers of securities sold by SCG (Blue Ridge and four Bayou City) to supervise Source’s registered personnel and to assert control over Source’s systems, operations and activities, according to a Complaint from FINRA’s Department of Enforcement currently under review by attorneys Alan Rosca and James Booker.

Source Capital Group, Inc., from September 2009 through September 2014, allegedly maintained an Office of Supervisory Jurisdiction (OSJ) in Bowling Green, Kentucky, the aforementioned Complaint also notes.

Next, the aforementioned Bowling Green OSJ allegedly supervised the Source branch offices in Allen, Texas and Coconut Creek, Florida, the Complaint states.

Later the Bowling Green OSJ, along with the Texas and Florida branch offices, known collectively as the ”Bowling Green Complex”, principally sold, allegedly, the securities of a pair of issuers: Blue Ridge Group, Inc. and Bayou City Exploration, Inc., the Complaint further details.

Source, from September 2009 through September 2014, also allegedly gave up its responsibility to supervise the Bowling Green Complex and, instead, allegedly allowed the principals of Blue Ridge and Bayou City to provide supervision over Source’s registered personnel and to assert control over the Firm’s systems, operations and activities, the Complaint states.

What is more, Source, by allegedly failing to establish and maintain a reasonable supervisory system to supervise the Bowling Green OSJ and to address the risks and potential conflicts of interest posed by Blue Ridge’s and Bayou City’s exercise of supervisory control over the Bowling Green Complex, allegedly violated NASD and FINRA Rules, the Complaint notes.

The Peiffer Rosca Wolf securities lawyers are investigating Source Capital’s alleged allowance of the principals of issuers of securities sold by SCG to supervise Source’s registered personnel and to assert control over Source’s systems, operations and activities.

Source Capital Allegedly Permitted Two Unregistered Principals of Blue Ridge and Bayou City to Supervise Personnel and Activities in the Bowling Green Complex

Source Capital also allegedly permitted two principals of Blue Ridge and Bayou City, neither of whom had been registered with FINRA in any capacity, to supervise personnel and activities in the Bowling Green Complex, according to a Complaint from FINRA’s Department of Enforcement presently being examined by attorneys Alan Rosca and James Booker.

Source Capital, from March 2013 through January 8, 2014, also allegedly failed to disclose material facts to prospective investors with regards to the sale of two Blue Ridge offerings and four Bayou City offerings, the Complaint notes.

The aforementioned offerings include that Blue Ridge and Bayou City allegedly paid the expenses of the Source offices in the Bowling Green Complex, paid non-cash compensation to Source registered representatives, and also exercised significant control over the personnel and operations of the Bowling Green Complex, the Complaint alleges.

Hence, Source, based on the aforementioned behavior, allegedly violated Sections of the Securities Act and therefore FINRA Rules, the Complaint notes.

Therefore, FINRA’s Department of Enforcement “respectfully requests” that Source fully disgorge any and all alleged ill-gotten gains, together with interest, and that Source bear the “costs of proceedings as are deemed fair and appropriate under the circumstances” in accordance with FINRA Rules, the Complaint notes.

It is also important to note that Blue Ridge Group, Inc., a Nevada corporation organized in August 1993, and was purportedly engaged primarily in the business of sponsoring and managing oil and gas drilling limited partnerships, the Complaint notes.

Finally, Bayou City Exploration, Inc. is purportedly a Nevada corporation which was organized in November 1994 as Gem Source Incorporated and later changed its name to Blue Ridge Energy, Inc. in May 1996 and then to Bayou City Exploration, Inc. in September 2005, the Complaint notes.

The Complaint also states that Bayou City was engaged primarily in the business of sponsoring and managing oil and gas drilling limited partnerships.

Securities Lawyers Investigating

The Peiffer Rosca Wolf securities lawyers often represent investors who lose money as a result of investment fraud and are currently investigating Source Capital’s alleged allowance of the principals of issuers of securities sold by SCG to supervise Source’s registered personnel and to assert control over Source’s systems, operations and activities. They take most cases of this type on a contingency fee basis and advance the case costs, and only get paid for their fees and costs out of money they recover for their clients.

Investors who believe they lost money as a result of Source Capital’s alleged allowance of the principals of issuers of securities sold by SCG to supervise Source’s registered personnel and to assert control over Source’s systems, operations and activities may contact the securities lawyers at Peiffer Rosca Wolf, Alan Rosca or James Booker, for a free no-obligation evaluation of their recovery options, at 888-998-0520 or via e-mail at arosca@prwlegal.com or jbooker@prwlegal.com.

Alan Rosca (1225 Posts)

Alan is a securities lawyer. He also teaches Securities Regulation at the Cleveland-Marshall College of Law. He focuses his legal practice on complex commercial and financial litigation and arbitration, particularly in the areas of securities and investment fraud. His office is in Cleveland, Ohio.


In our legal system, every person is innocent until and unless found guilty by a court of law or a tribunal. Whenever we reference “allegations” or charges that are “alleged,” such allegations or charges have not been proven, and are merely accusations, not findings of fault, as of the date of the blog. We do not have, nor do we undertake, a duty to continue to monitor or follow cases about which we report, and/or to publish subsequent blogs regarding various developments that may occur in such cases. Readers are encouraged to conduct their own research regarding any such cases and any developments that may or may not have occurred in such cases.