DOB: Hunton Oil Partners et al - Stipulation


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IN THE MATTER OF:

HUNTON OIL PARTNERS LP

GIDDINGS OIL AND GAS LP

ASYM ENERGY FUND III LP


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   STIPULATION AND
   AGREEMENT

DOCKET NO. CF-13-8320-S

   

WHEREAS, the Banking Commissioner ("Commissioner") is charged with the administration of Chapter 672a of the General Statutes of Connecticut, the Connecticut Uniform Securities Act ("Act"), and Sections 36b-31-2 to 36b-31-33, inclusive, of the Regulations of Connecticut State Agencies ("Regulations") promulgated under the Act;

WHEREAS, Hunton Oil Partners LP (“Hunton”) is a Delaware limited partnership that was formed on September 17, 2009.  Hunton is currently an inactive investment fund whose address last known to the Commissioner is 9 West Broad Street, Suite 550, Stamford, Connecticut 06902;

WHEREAS, Giddings Oil and Gas LP (“Giddings”) is a Delaware limited partnership that was formed on October 23, 2009.  Giddings is currently an inactive investment fund whose address last known to the Commissioner is 9 West Broad Street, Suite 550, Stamford, Connecticut 06902;

WHEREAS, Asym Energy Fund III LP (“Asym”) is a Delaware limited partnership that was formed on July 8, 2010.  Asym is currently an inactive investment fund whose address last known to the Commissioner is 9 West Broad Street, Suite 550, Stamford, Connecticut 06902;

WHEREAS, Hunton Oil Genpar LLC, Giddings Genpar LLC and Asym Capital III LLC (collectively, the “GPs”) (non-respondents) are currently inactive Delaware limited liability companies whose address last known to the Commissioner is 9 West Broad Street, Suite 550, Stamford, Connecticut 06902.  The GPs are the general partners of Hunton, Giddings and Asym (collectively “Partnerships”), respectively;

WHEREAS, Gregory Richard Imbruce (CRD No. 4392235) (“Imbruce”) (non-respondent) is an individual whose address last known to the Commissioner is 92 Turtle Back Road South, New Canaan, Connecticut 06840.  Imbruce formed the Partnerships to invest in oil and natural gas properties in Oklahoma and Texas, and formed the GPs to serve as the general partners of the Partnerships,  respectively.  The GPs were owned and controlled by Glenrose Holdings LLC (non-respondent), a Delaware limited liability company that in turn was owned and controlled by Imbruce.  From approximately September 2009 to approximately August 2011, Imbruce exercised complete control over and was the alter ego of the GPs and the Partnerships;

WHEREAS, the Commissioner, through the Securities and Business Investments Division (“Division”) of the Department of Banking (“Department”) conducted an investigation of the Partnerships, the GPs and Imbruce pursuant to Section 36b-26 of the Act (“Investigation”);

WHEREAS, as a result of the Investigation, the Division obtained evidence that from approximately September 2009 to approximately January 2010, Hunton offered and sold securities (“Hunton LP Units”) from Connecticut to investors in a private placement for which no exemptive, covered security or registration filing was made under the Act;

WHEREAS, as a result of such Investigation, the Division obtained evidence that from approximately November 2009 to approximately July 2011, Giddings offered and sold securities (“Giddings LP Units”) from Connecticut to investors in a private placement for which no exemptive, covered security or registration filing was made under the Act;

WHEREAS, as a result of such Investigation, the Division obtained evidence that from approximately August 2010 to approximately December 2012, Asym offered and sold securities (“Asym LP Units”) from Connecticut to investors in a private placement.  On November 10, 2010, Asym filed a Form D (Notice of Exempt Offering of Securities) with the Securities and Exchange Commission pursuant to Rule 506 of Regulation D.  On its federal filing, Asym reported that the first sale of securities had occurred on August 16, 2010.  Asym only made its Rule 506 notice filing with the Commissioner on November 17, 2010.  The filing was not timely because Section 36b-21(e) of the Act required Asym LP to make its notice filing within 15 days after the first sale;

WHEREAS, as a result of such Investigation, the Division obtained evidence that Imbruce, as the control person and alter ego of the GPs, was the individual responsible for making the requisite state filings on behalf of each of the Partnerships;

WHEREAS, in approximately August 2011, a dispute arose between Imbruce, individually and in his capacity as the control person of the GPs, and approximately eight other limited partners of the Partnerships (collectively “Limited Partners”) regarding how the Partnerships were being managed by Imbruce and the GPs.  As a result, in approximately February 2013, the Limited Partners voted to remove the GPs (and in essence, Imbruce) as the general partners of the Partnerships, and appointed Charles Henry III (“Henry”), an investor and limited partner in the Partnerships, to become the general partner of each Partnership;

WHEREAS, on July 18, 2012, the Limited Partners, including Henry, individually and derivatively on behalf of the Partnerships, filed a complaint in Connecticut Superior Court against Imbruce, the GPs, Glenrose Holdings LLC, and several other parties, Henry et al v. Imbruce et al., Docket No. (X08) FST CV-12-5013927-S, alleging various claims arising out of the management and control of the Partnerships. This action was subsequently consolidated with Henry et al. v. Imbruce et al., Docket No. (X08) FST-CV12-6014987-S (collectively, the “Superior Court Actions”);

WHEREAS, the Giddings Limited Partnership Agreement and the Asym Limited Partnership Agreement contained arbitration clauses, but the Hunton Limited Partnership Agreement did not.  In January 2013, Imbruce, the GPs, and Glenrose Holdings LLC (and one other party not related to this Stipulation and Agreement) filed a demand for arbitration against Giddings and Asym and nine limited partners of Giddings and Asym with the American Arbitration Association (Imbruce et al v. Henry et al., Docket No. 1212-2015-1300-0058) (“Arbitration”), for what were essentially counter-claims to the claims asserted in the Superior Court Actions.  On July 11, 2014, the Superior Court stayed the Superior Court Actions pending the outcome of the Arbitration.  Thereafter, all the parties agreed to submit the dispute relating to the Hunton Limited Partnership to arbitration as well;

WHEREAS, among the claims asserted in the Arbitration was the issue of whether the Limited Partners’ removal of the GPs and Imbruce as the general partners of the Partnerships in approximately February 2013 and the substitution of Henry as the General Partner was proper and lawful;

WHEREAS, on December 17, 2013, the Commissioner, acting pursuant to Section 36b-27 of the Act, issued an Order to Cease and Desist, Notice of Intent to Fine and Notice of Right to Hearing (Docket No. CF-13-8064-S) (collectively “Notice”) against Imbruce, the Partnerships, and the GPs, alleging multiple violations of the Act and Regulations, which Notice is incorporated by reference herein.  Each of the respondents requested a hearing on the matters alleged in the Notice.  The Notice alleged that Hunton and Giddings violated Section 36b-16 of the Act by offering and selling securities from Connecticut to at least one investor, which securities were not registered in Connecticut under the Act.  The Notice also alleged that although Asym filed with the Commissioner a Notice of Sale of Securities pursuant to Rule 506 of Regulation D, the filing was not timely and therefore constituted a violation of Section 36b-16 of the Act;

WHEREAS, on August 26, 2014, the Commissioner, Imbruce and the GPs entered into a Consent Order settling the respective claims against Imbruce and the GPs  (“Imbruce Consent Order”).  At the time of the Imbruce Consent Order, the Commissioner deferred resolution of the claims against the Partnerships set forth in the Notice until a determination was made regarding who controlled the Partnerships;

WHEREAS, on September 11, 2015, the arbitrator in the Arbitration issued an Arbitration Award (“Arbitration Award”) finding, among other things, that “the removal of Hunton Oil Genpar LLC, Giddings Genpar LLC and Asym Capital III LLC, and/or Gregory Imbruce as the General Partner(s) of the subject Limited Partnerships [the Partnerships] was lawful, and in compliance with all legal and contractual requirements and is hereby found to have been effective and is upheld.”  (Arbitration Award at 2).  In ruling against Imbruce on all counts, the arbitrator relieved the Partnerships and Partnership investors from liability for any alleged wrongdoing.  The Arbitration Award was affirmed by the Connecticut Superior Court in Henry v. Imbruce, Superior Court, Judicial District of Stamford, Docket No. (X08) FST-CV-125013927-S, 2016 WL 1728236 (April 11, 2016, Genuario, J.).  Although Imbruce and the GPs have appealed the Superior Court’s confirmation of the Arbitration Award on April 29, 2016 to the Connecticut Appellate Court (AC 39155), the Division has determined that a resolution of the claims pending against the Partnerships is appropriate at this time;

WHEREAS, the Commissioner believes that grounds exist to support administrative sanctions against the Partnerships pursuant to Section 36b-27 of the Act;

WHEREAS, an administrative proceeding initiated under Section 36b-27 of the Act would constitute a “contested case” within the meaning of Section 4-166(4) of the General Statutes of Connecticut, as amended by Public Act 15-61;

WHEREAS, Section 4-177(c) of the General Statutes of Connecticut and Section 36a-1-55(a) of the Regulations provide that a contested case may be resolved by stipulation or agreed settlement, unless precluded by law;

WHEREAS, the Partnerships desire to settle the matters described herein and voluntarily enter into this Stipulation and Agreement, acknowledging that this Stipulation and Agreement is in lieu of any court action or administrative proceeding adjudicating any issue of fact or law on the matters described herein;

WHEREAS, the Partnerships expressly consent to the Commissioner’s jurisdiction under the Act and to the terms of this Stipulation and Agreement;

WHEREAS, the Partnerships, through their execution of this Stipulation and Agreement, voluntarily waive any rights they may have to seek judicial review or otherwise challenge or contest the terms and conditions of this Stipulation and Agreement;

WHEREAS, the Partnerships specifically assure the Commissioner that the violations alleged in this Stipulation and Agreement shall not occur in the future;

AND WHEREAS, based on the fact that Imbruce, the control person of the LPs from 2009 through 2012, paid an administrative fine in the amount of $75,000 pursuant to the Imbruce Consent Order, and that Imbruce no longer occupies a control or management position with respect to the Partnerships, the Commissioner has made the determination not to impose the maximum fine that might otherwise have been imposed against the Partnerships pursuant to Section 36b-27(d) of the Act.

NOW THEREFORE, THE PARTIES HERETO DO MUTUALLY AGREE AS FOLLOWS:

1.
No later than the date this Consent Order is entered by the Commissioner, the Partnerships shall jointly and severally remit to the Department of Banking by cashier’s check, certified check or money order made payable to “Treasurer, State of Connecticut”, the sum of one thousand dollars ($1,000), as reimbursement for past due notice filing fees and partial reimbursement for the Division’s investigative costs;
2.
The Partnerships shall refrain from offering or selling securities in or from Connecticut absent compliance with Section 36b-16 of the Act, including timely compliance with any applicable exemptive or covered security notice filing requirements;
3. Execution of this Stipulation and Agreement by the Commissioner is without prejudice to the right of the Commissioner to take enforcement action against the Partnerships based upon a violation of this Stipulation and Agreement or the basis for its entry if the Commissioner determines that compliance is not being observed with the terms hereof; and
4. This Stipulation and Agreement shall become binding when executed by each Partnership and the Commissioner.

IN WITNESS WHEREOF, the undersigned have executed this Stipulation and Agreement on the dates indicated.


Dated at Hartford, Connecticut,       ____/s/__________________ 
this 29th day of August 2016.   Jorge L. Perez
    Banking Commissioner 


I, Charles Henry III, state on behalf of Hunton Oil Partners LP, that I have read the foregoing Stipulation and Agreement; that I know and fully understand its contents; that I am authorized to execute this Stipulation and Agreement on behalf of Hunton Oil Partners LP; and that Hunton Oil Partners LP agrees freely and without threat or coercion of any kind to comply with the terms and conditions stated herein.

    Hunton Oil Partners LP
     
     
By:    ____/s/____________
  Charles Henry III
General Partner


State of:  Texas

County of:  Harris

On this the 17th day of August 2016, before me, the undersigned officer, personally appeared Charles Henry III, who acknowledged himself to be the General Partner of Hunton Oil Partners LP, and that he, as such General Partner, being authorized so to do, executed the foregoing instrument for the purposes therein contained, by signing the name of the limited partnership by himself as General Partner.

In witness whereof I hereunto set my hand.


______________________________
Notary Public
Date Commission Expires:  3/25/2020


I, Charles Henry III, state on behalf of Giddings Oil and Gas LP, that I have read the foregoing Stipulation and Agreement; that I know and fully understand its contents; that I am authorized to execute this Stipulation and Agreement on behalf of Giddings Oil and Gas LP; and that Giddings Oil and Gas LP agrees freely and without threat or coercion of any kind to comply with the terms and conditions stated herein.

    Giddings Oil and Gas LP
     
     
By:    ____/s/____________
  Charles Henry III
General Partner


State of:  Texas

County of:  Harris

On this the 17th day of August 2016, before me, the undersigned officer, personally appeared Charles Henry III, who acknowledged himself to be the General Partner of Giddings Oil and Gas LP, and that he, as such General Partner, being authorized so to do, executed the foregoing instrument for the purposes therein contained, by signing the name of the limited partnership by himself as General Partner.

In witness whereof I hereunto set my hand.


_______________________________
Notary Public
Date Commission Expires:  3/25/2020

I, Charles Henry III, state on behalf of Asym Energy Fund III LP, that I have read the foregoing Stipulation and Agreement; that I know and fully understand its contents; that I am authorized to execute this Stipulation and Agreement on behalf of Asym Energy Fund III LP; and that Asym Energy Fund III LP agrees freely and without threat or coercion of any kind to comply with the terms and conditions stated herein

    Asym Energy Fund III LP
     
     
By:    ____/s/_____________
  Charles Henry III
General Partner


State of:  Texas

County of:  Harris

On this the 17th day of August 2016, before me, the undersigned officer, personally appeared Charles Henry III, who acknowledged himself to be the General Partner of Asym Energy Fund III LP, and that he, as such General Partner, being authorized so to do, executed the foregoing instrument for the purposes therein contained, by signing the name of the limited partnership by himself as General Partner.

In witness whereof I hereunto set my hand.


______________________________
Notary Public
Date Commission Expires:  3/25/2020

 




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