UNITED STATES OF AMERICA

Before the

SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934

Release No. 83636 / July 16, 2018

ADMINISTRATIVE PROCEEDING

File No. 3-16000

In the Matter of

Houston American Energy Corp.,

John F. Terwilliger, Jr.,

Undiscovered Equities Inc., and

Kevin T. McKnight

Respondents

 

ORDER ESTABLISHING A FAIR FUND,

APPOINTING A FUND 

ADMINISTRATOR, AND SETTING 

ADMINISTRATOR’S BOND AMOUNT

On August 4, 2014, the Commission instituted cease-and-desist proceedings against 

Houston American Energy Corp. (“Houston American”) and John F. Terwilliger, Jr. 

(“Terwilliger”) (collectively, “Houston American Respondents”) and Undiscovered Equities Inc.

(“Undiscovered Equities”) and Kevin T. McKnight (“McKnight”) (collectively, the 

“Undiscovered Equities Respondents” and together with the Houston American Respondents, 

“Respondents”).1 On April 23, 2015, this proceeding was settled and the Commission issued 

two orders, one as to the Houston American Respondents (“Houston American Respondents 

Order”)2and the second as to the Undiscovered Equities Respondents (“Undiscovered Equities 

 

1

 See Order Instituting Cease-and-Desist Proceedings Pursuant to Section 8A of the Securities Act of 1933 and 21C 

of the Securities Exchange Act of 1934, Securities Act Rel. No. 96211 (Aug. 4, 2014).

2

 See Order Making Findings and Imposing Remedial Sanctions and a Cease-and-Desist Order Pursuant to Section 

8A of the Securities Act of 1933 and Section 21C of the Securities Exchange Act of 1934 as to Houston American 

Energy Cop. and John F. Terwilliger, Securities Act Rel. No. 9756 (Apr. 23, 2015.)
2

Respondents Order”).3 In the orders, the Commission found that the Respondents violated the 

federal security laws. In the Houston American Respondents Order, the Commission ordered 

Houston American to pay a civil money penalty of $400,000 and Terwilliger to pay a civil 

money penalty of $150,000. In the Undiscovered Equities Respondents Order, the Commission 

ordered McKnight to pay a civil penalty of $22,500. The Respondents have paid a total of 

$572,500, as ordered.

The Division of Enforcement now recommends that a Fair Fund be established, pursuant 

to Section 308(a) of the Sarbanes-Oxley Act of 2002, as amended, for the civil penalties paid by 

the Respondents for distribution to harmed investors.

The Division of Enforcement also now recommends the appointment of Heffler Claims 

Group (“Heffler”), pursuant to Rule 1105(a) of the Commission’s Rules on Fair Fund and 

Disgorgement Plans (“Rules”),4as the fund administrator and recommends, pursuant to Rule 

1105(c),5that the fund administrator’s bond be set at $572,500. Heffler is not included in the 

Commission’s approved pool of administrators. However, appointing Heffler will result in 

significant economies of time and expense because Heffler serves as a class administrator in a 

related class action distribution arising out of the same conduct and similar time period.

Accordingly, IT IS HEREBY ORDERED, that:

A. pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002, as amended, a 

Fair Fund is established for the $572,500 paid by the Respondents for distribution 

to harmed investors; and,

 

3

 See Order Making Findings and Imposing Remedial Sanctions and a Cease-and-Desist Order Pursuant to Section 

8A of the Securities Act of 1933 as to Undiscovered Equities, Inc. and Kevin T. McKnight, Securities Act Rel. No. 

9757 (Apr. 23, 2015).

4

17 C.F.R. § 201.1105(a).

5

17 C.F.R. § 201.1105(c).
3

B. pursuant to Rule 1105(a) of the Rules, 17 C.F.R. § 201.1105(a), Heffler is 

appointed as fund administrator of the Fair Fund and shall obtain a bond in the 

amount of $572,500 in accordance with Rule 1105(c) of the Rules, 17 C.F.R. 

§ 201.1105(c).

By the Commission.

Brent J. Fields

Secretary