On April 23, 2015, the Commission issued two separate orders (collectively, the “Orders”) that settled cease-and-desist proceedings that were instituted on August 4, 2014, against Houston American Energy Corp. (“Houston American”), John F. Terwilliger (“Terwilliger”), Undiscovered Equities, Inc. (“Undiscovered Equities”), and Kevin T. McKnight (“McKnight”) (collectively, the “Respondents”). In the Orders, the Commission found that, between November 2009 and April 2010, Houston American, Terwilliger and their agents, promoted Houston American’s interest in a Columbian oil and gas production area known as “CPO-4 block.” Houston American and Terwilliger made a series of fraudulent statements and omissions that materially exaggerated CPO-4 block’s value to Houston American and downplayed any associated risks. In doing so, Houston American entered into an agreement with Undiscovered Equities, a marketing firm owned and operated by McKnight that specialized in small-cap stock promotion, to post on its website and distribute to its subscribers a series of promotion articles about Houston American and its investment in CPO-4 block. Undiscovered Equities disclosed that it was compensated by Houston American, but did not disclose the amount of compensation it received. The Commission ordered the Respondents to pay a total of $572,500.00 in civil money penalties. See the Commission’s orders: Release Nos. 33-9756 and 33-9757.

The Respondents have paid a total of $572,500.00.

On July 16, 2018, the Commission issued an order establishing a fair fund (the “Fair Fund”), pursuant to Section 308(a) of the Sarbanes-Oxley Act, as amended, so the penalties, along with the disgorgement and prejudgment interest, can be distributed to harmed investors. See the Commission’s Order: Release No. 83636.

On February 25, 2019, the Commission issued an order appointing Miller Kaplan Arase LLP as the Tax Administrator of the Fair Fund. See the Commission’s Order: Release No. 34-85185.

On June 6, 2022, the Commission published a notice of the proposed plan of distribution and opportunity for comment and simultaneously published the proposed plan of distribution (“Proposed Plan”). The notice provides the public with 30 days to submit their comments on the Proposed Plan. See the Commission’s Notice: Release No. 34-95044 and the Proposed Plan.

The Proposed Plan provides for the distribution of the Net Available Fair Fund, comprised of the Fair Fund, plus accrued interest, less taxes and administrative costs, to compensate investors based on their losses on shares of Houston American common stock purchased between November 10, 2009 and April 18, 2012, due to the misconduct of the Respondents.

On August 5, 2022, the Commission issued an order approving the Proposed Plan and simultaneously posted the approved corrected plan of distribution (the “Plan”). See the Commission’s Order: Release No.34-95432 and the Plan.

On September 22, 2023, the Commission issued an order approving the disbursement of $438,346.23 from the Fair Fund for distribution by the Fund Administrator in accordance with the Plan. See the Commission’s Order: Release No. 34-98486.

For more information, please contact the Commission:

Office of Distributions
Email: ENFOfficeofDistributions@sec.gov