J.P. Turner/Provident Royalties Update

A legal rarity occurred recently concerning investor lawsuits and arbitration claims over private placements in Provident Royalties. In a surprise decision, a judge has ruled in favor of one of the broker/dealers that sold the soured investments: J.P. Turner & Co.

On May 17, U.S. District Court Judge Julie E. Carnes dismissed a class-action lawsuit brought against J.P. Turner by an investor. According to the judge’s ruling, “no facts or legal authority had been cited to support allegations that J.P. Turner owed a duty to confirm the accuracy of Provident’s statements in the private placement memoranda.”

J.P. Turner sold Provident private placements from September 2006 to January 2009, according to the lawsuit.

A number of other broker/dealers also sold investments in Provident Royalties to investors. The deals themselves were packaged as oil and gas investments. In 2009, the Securities and Exchange Commission (SEC) charged Provident with fraud.

In total, Provident Royalties raised $485 million from investors before filing for bankrupcty protection. The company is now in receivership.

Since then, many investors have filed lawsuits and arbitration claims with the Financial Industry Regulatory Authority (FINRA) against various broker/dealers that marketed and sold private placements in Provident Royalties. Of the cases that have been settled, many investors have emerged victorious.

As reported May 19 by Investment News, the recent lawsuit against J.P. Turner was filed in September 2009. The investor who filed the lawsuit claimed that J.P. failed to disclose a multitude of material facts, including allegations that money raised from the private placement offerings was not invested as stated in private placement memoranda and that funds from clients who invested in later Provident offerings were being as part of a Ponzi scheme.