Initial Decision Release No. 1376

Administrative Proceeding

File No. 3-18534

UNITED STATES OF AMERICA

Before the

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

In the Matter of

Jason A. Halek

Initial Decision

May 9, 2019

Appearances: Keefe Bernstein for the Division of Enforcement,

Securities and Exchange Commission

Jason A. Halek, pro se 

Before: Brenda P. Murray, Chief Administrative Law Judge

Background

The Securities and Exchange Commission instituted this proceeding 

pursuant to Section 15(b) of the Securities Exchange Act of 1934 on June 7, 

2018. This proceeding is based on the civil injunction entered against 

Respondent Jason A. Halek in a 2014 lawsuit. See OIP at 2. The order 

instituting proceedings (OIP) reiterates the same allegations as the 2014 

lawsuit—that is, between September 2009 and June 2010, Halek operated as 

an unregistered broker-dealer and fraudulently offered and sold unregistered 

securities. Id.

Halek was served with the OIP on June 13, 2018. See Jason A. Halek, 

Admin. Proc. Rulings Release No. 6308, 2018 SEC LEXIS 3124, at *2 (ALJ 

Nov. 7, 2018). Halek submitted an answer on December 14, 2018, and 

attended the prehearing conference the next day. See Halek, Admin. Proc. 

Rulings Release No. 6402, 2018 SEC LEXIS 3516, at *1 (ALJ Dec. 13, 2018). 

At the prehearing conference, I determined that summary disposition was an 

appropriate method of resolving the proceeding and ordered a procedural 

schedule with extended time for Halek to respond. Id. at *1-2; see 17 C.F.R. 

§ 201.250(b).
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Delays occurred because of the five-week government shutdown from 

December 27, 2018, to January 25, 2019. See Pending Admin. Proc., 

Securities Act of 1933 Release No. 10603, at *1 (Jan. 30, 2019). The Division 

of Enforcement filed its motion for summary disposition on February 14, 

2019.1 The Division seeks to bar Halek from association with a broker or 

dealer and argues that application of public interest factors to the undisputed 

facts shows that the requested bar is in the public interest. Mot. at 1, 11.

Halek submitted his brief in opposition on March 28, 2019. Halek 

argues that the Division’s motion contains false and misleading statements 

and that he needs oral argument to explain his position, which is that his 

attorney had a conflict of interest and that he was pressured to sign a consent 

that he did not understand. Opp’n at 1. Halek states that he is remorseful 

that people lost money. Id. at 2.

The Division submitted its reply on April 12, 2019. The Division argues 

that the opposition brief does not dispute the relevant evidence. Reply at 1. 

It also argues that Halek’s prior attorney’s involvement was limited to an 

earlier lawsuit and is therefore irrelevant. Id. at 2. 

 

1 The motion included the declaration of Keefe M. Bernstein with nine 

exhibits: from a 2010 Commission lawsuit against Halek, the complaint 

(Ex. A), Halek’s consent (Ex. B), and the final judgment (Ex. C); from the 

2014 lawsuit, the complaint (Ex. D), Halek’s consent (Ex. E), and the final 

judgment (Ex. F); from a 2015 criminal action against Halek, the indictment 

(Ex. G) and judgment (Ex. H); and an email from Halek on October 16, 2018

(Ex. I). 
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Findings of Fact2

Halek owned and operated Halek Energy, LLC, a Texas limited liability 

company. Ex. A at 2. Halek Energy filed for bankruptcy under Chapter 11 in 

2011, and a final decree was entered on February 19, 2014. Ex. D at 4.

The Commission filed two complaints against Halek alleging securities 

law violations in the United States District Court for the Northern District of 

Texas in 2010 and 2014. The complaint in the 2010 lawsuit, SEC v. Halek 

Energy, LLC, No. 3:10-cv-1719 (N.D. Tex.), was filed on August 31, 2010. As 

alleged in the complaint, between June 2007 and September 2009, Halek 

participated in unregistered securities offerings of working interests in oil 

and gas projects and pre-IPO shares that raised approximately $22 million 

from at least 300 investors. Ex. A at 1. The offering materials contained 

false and misleading statements and Halek misused investor funds. Id. at 1-

2. The 2010 lawsuit resulted in a final judgment on consent entered on 

September 13, 2012. Ex. C at 1. The court enjoined Halek from committing 

any future violations of Sections 5 and 17(a) of the Securities Act, Section

10(b) of the Exchange Act, and Rule 10b-5, imposed a $50,000 civil penalty, 

and determined that Halek was jointly and severally liable to disgorge $26.6 

million in profits from the conduct alleged in the complaint and prejudgment 

 

2 The record consists of the pleadings, the exhibits attached to the 

Division’s Motion which I accept as evidence, the prehearing conference 

transcript, and facts officially noticed. 17 C.F.R. §§ 201.111(c), .250(b), .323. 

In addition, facts are taken from the allegations in the complaints from 

underlying civil cases, which Halek agreed that he could not contest in later 

administrative proceedings before the Commission. Exs. B at 5, E at 3; see 

Siris v. SEC, 773 F.3d 89, 96 (D.C. Cir. 2014) (“Whether or not issues 

established in the consent judgment were ‘actually litigated’ for purposes of 

[collateral] estoppel, the Commission’s application of factual preclusion in the 

follow-on proceeding was appropriate because the judgment unambiguously 

barred Siris from making any future challenge to the allegations in the [civil] 

complaint.”); Marshall E. Melton, Investment Advisers Act of 1940 Release 

No. 2151, 2003 WL 21729839, at *2-3, *9 (July 25, 2003) (clarifying the 

Commission’s position that, having consented to an injunction based on the 

allegations in a civil complaint, respondents may not question those 

allegations in a proceeding based on the injunction); 17 C.F.R. § 202.5(e).
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interest. Id. at 1-5. The court of appeals affirmed the district court’s final 

judgment. SEC v. Halek, 537 F. App’x 576 (5th Cir. 2013).3 

The Commission initiated the 2014 lawsuit, SEC v. Halek, No. 3:14-cv1106 (N.D. Tex.), on March 28, 2014. When Halek became aware of the 

investigation that resulted in the 2010 lawsuit, he engaged in a new 

fraudulent scheme. Ex. D at 2-3. Between September 2009 and June 2010, 

Halek and associates offered and sold more than $5.5 million of unregistered 

securities in the form of working interests in six oil and gas projects to more 

than 100 investors nationwide. Id. at 1-2. Halek employed a “straw man 

scheme” where Halek Energy’s ownership of the oil and gas projects was 

disguised by offering documents falsely stating that the projects were instead 

owned by other LLCs. Ex. D at 1-2. The 2014 lawsuit resulted in a final 

judgment entered on consent on April 20, 2017. Ex. F at 1. The court

enjoined Halek from violating Sections 5 and 17(a) of the Securities Act and 

Sections 10(b) and 15(a)(1) of the Exchange Act and Rule 10b-5. Id. at 1-4. 

In his consents to judgment in the 2010 and 2014 lawsuits, Halek

acknowledged that entry of the permanent injunctions would have collateral 

consequences, including statutory disqualification from membership in or 

association with a member of a self-regulatory organization. Exs. B at 5, E at 

3.

On August 6, 2015, Halek was indicted for conspiracy, violations of the 

Safe Drinking Water Act, making false statements, and obstructing an 

official proceeding in United States v. Halek, No. 1:15-cr-130 (D.N.D.). Ex. G

at 7-26. Halek pleaded guilty to three counts of violating the Safe Drinking 

Water Act; he was sentenced to time served and ordered to pay a $50,000 fine 

and $35,000 in restitution. Ex. H at 1-3, 7. 

Conclusions of Law

As an initial mater, summary disposition is frequently an appropriate 

way to resolve follow-on administrative proceedings. Gibson v. SEC, 561 

F.3d 548, at 553 (6th Cir. 2009); Gary M. Kornman, Exchange Act Release 

No. 59403, 2009 WL 367635, at *10 (Feb. 13, 2009), pet. denied, 592 F.3d 173 

(D.C. Cir. 2010). This is true, in part, because the parties are precluded from 

contesting issues that were previously litigated or settled in district court. 

See, e.g., Siris, 773 F.3d at 96. Halek may believe that his attorney had a 

 

3 As of 2014, Halek had not made any payments despite the Fifth Circuit’s 

affirmance of the judgment. See Ex. D at 2.
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conflict and that he should therefore not be bound by his consent in the 2010 

and 2014 lawsuits, see Opp’n at 1, but—as I told him during the prehearing 

conference, Prehr’g Tr. 13-15 (Dec. 13, 2018)—he cannot collaterally attack 

those final judgments in this proceeding. See Tzemach David Netzer Korem, 

Exchange Act Release No. 70044, 2013 WL 3864511, at *5 & n.39 (July 26, 

2013).

The issue here is whether a sanction is appropriate. Section 15(b)(6) of 

the Exchange Act authorizes the Commission to impose a sanction on a 

person who has been enjoined from violating the securities statutes based on 

their conduct while associated with a broker or dealer where it is in the 

public interest to do so. 15 U.S.C. § 78o(b)(4)(C), (6)(A)(iii).

Two of the Section 15(b) requirements were established in the 2014 

lawsuit. Halek was enjoined against violating the federal security laws in 

2017. Ex. F at 1-4. At the time he was acting as an unregistered broker by 

engaging in the business of effecting transactions in securities for the 

accounts of others. Ex. D at 9, 12-13; see 15 U.S.C. § 78c(a)(4)(A). And, for 

the purposes of Section 15(b), unregistered brokers are considered to be 

associated with a broker-dealer. Gary L. McDuff, Exchange Act Release 

No. 74803, 2015 WL 1873119, at *1 n.2 (Apr. 23, 2015). That leaves only the 

question whether a sanction would be in the public interest.

The established criteria for assessing the public interest are found in 

Steadman v. SEC, 603 F.2d 1126, 1140 (5th Cir. 1979), aff’d on other 

grounds, 450 U.S. 91 (1981). Toby G. Scammell, Advisers Act Release 

No. 3961, 2014 WL 5493265, at *5 (Oct. 29, 2014). The public interest factors 

include: 

the egregiousness of the respondent’s actions, the 

isolated or recurrent nature of the infraction, the degree 

of scienter involved, the sincerity of the respondent’s 

assurances against future violations, the respondent’s 

recognition of the wrongful nature of his conduct, and 

the likelihood that the respondent’s occupation will 

present opportunities for future violations. 

Id. The Commission also considers the deterrent effect of administrative 

sanctions. Peter Siris, Advisers Act Release No. 3736, 2013 WL 6528874, at 

*11 n.72 (Dec. 12, 2013), pet. denied, 773 F.3d 89 (D.C. Cir. 2014). The public 

interest inquiry is “flexible” and “no one factor is dispositive.” Conrad P. 

Seghers, Advisers Act Release No. 2656, 2007 WL 2790633, at *4 (Sept. 26, 

2007), pet. denied, 548 F.3d 129 (D.C. Cir. 2008).
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Egregiousness and recurrent nature

Halek’s conduct is egregious and recurrent in at least two respects. 

First, Halek knowingly violated the antifraud provisions of the both the 

Securities Act and Exchange Act. Ex. D at 1-2, 10-11. Halek’s fraudulent 

acts that were the basis of the 2014 lawsuit involved sales of over $5.5 million 

in unregistered securities to over 100 investors located across the country 

during a nine month period. Id. at 1-2. Fraud is considered among the most 

serious types of conduct prohibited by the securities statutes. Melton, 2003 

WL 21729839, at *9 (“[C]onduct that violates the antifraud provisions of the 

federal securities laws is especially serious and subject to the severest 

sanction under the securities laws.”). 

Second, when Halek engaged in the activities that were the basis for the 

2014 lawsuit in 2009, he did so while he was being investigated for similar 

fraudulent conduct that he engaged in between June 2007 and September 

2009. Ex. D at 2; see Ex. A at 1-2, 7-10.

Degree of scienter involved 

Halek acted with scienter as shown by the fact that violations of the 

statutory and regulatory provisions covered by the injunction in the 2014 

lawsuit require scienter—that is, Section 10(b) of the Exchange Act and Rule 

10b-5, and Section 17(a)(1) of the Securities Act. See Aaron v. SEC, 446 U.S. 

680, 701-02 (1980). Moreover, the fact that his violations were so similar to 

the violations for which he was already being investigated in connection with 

the 2010 lawsuit suggests that he must have been at least extremely reckless

to repeat his illicit behavior. Cf. Andresen v. Maryland, 427 U.S. 463, 483 

(1976) (“The Court has often recognized that proof of similar acts is 

admissible to show intent or the absence of mistake.”). And extreme 

recklessness establishes scienter. See Dolphin & Bradbury, Inc. v. SEC, 512 

F.3d 634, 639 (D.C. Cir. 2008); Gregory O. Trautman, Securities Act Release 

No. 9088A, 2009 WL 6761741, at *16 (Dec. 15, 2009). 

Sincerity of assurances against future violations and recognition of the 

wrongful nature of his conduct

Halek has not offered any assurances against future violations. Nor has 

he recognized the wrongful nature of his conduct. One could argue that by 

consenting to the judgment in the 2014 lawsuit, Halek has acknowledged his 

wrongdoing. But that assumption lacks support because Halek’s answer 

denied all of the allegations in the OIP and, at every stage in this proceeding,

Halek has denied the legitimacy of the injunction in the 2014 lawsuit. See 

Answer at 1; Ex. I at 1 (“I believe this to be an illegal and/or unethical action 

on several accounts.”); Preh’rg Tr. 7-9, 11-13 (Dec. 13, 2018) (asserting that 
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the consent judgments in the 2010 and 2014 lawsuits are “fraudulent 

judgments”); Opp’n at 1-2. Despite his remorse for investor losses, Halek 

does not appear to acknowledge that he caused them. See, e.g., Opp’n at 2 

(placing the blame on the “high risk” oil-and-gas business and muddling 

causality with statements such as “[e]verything I have been through has cost 

people money”).

Opportunities for future violations

Based on Halek’s record of failing to comply with securities laws and 

regulations, barring him from association with a broker or dealer is 

appropriate to offer some protection to the investing public. See Korem, 2013 

WL 3864511, at *6 & n.50. Even if the level of protection provided by an 

industry bar is minimal given that Halek was not associated with a broker or 

dealer when he violated the securities statutes from June 2007 through June 

2010, the bar will at least prevent him from applying a patina of legitimacy to 

his actions in the event of future misconduct. 

For all of the reasons stated, I find it to be in the public interest to bar 

Halek from association with a broker or dealer.

Order

I GRANT the Division of Enforcement’s motion for summary disposition. 

I ORDER that, pursuant to Section 15(b) of the Securities Exchange Act 

of 1934, Jason A. Halek is BARRED from association with any broker or 

dealer.

This initial decision shall become effective in accordance with and 

subject to the provisions of Rule 360 of the Commission’s Rules of Practice, 17

C.F.R. § 201.360. Pursuant to that Rule, a party may file a petition for 

review of this initial decision within twenty-one days after service of the 

initial decision. A party may also file a motion to correct a manifest error of 

fact within ten days of the initial decision, pursuant to Rule 111 of the 

Commission’s Rules of Practice, 17 C.F.R. § 201.111. If a motion to correct a 

manifest error of fact is filed by a party, then a party shall have twenty-one 

days to file a petition for review from the date of the undersigned’s order 

resolving such motion to correct a manifest error of fact. The initial decision 

will not become final until the Commission enters an order of finality. The 

Commission will enter an order of finality unless a party files a petition for 

review or a motion to correct a manifest error of fact or the Commission 
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determines on its own initiative to review the initial decision as to a party. If 

any of these events occur, the initial decision shall not become final as to that 

party.

_______________________________

Brenda P. Murray

Chief Administrative Law Judge