2026-04-07 SEC Press pdf 162 KB 9,255 chars

In re SOURCEROCK GROUP

Exhibit of SEC Announces Enforcement Results for Fiscal Year 2025

Enriched metadata

Scheme: investment-adviser-fraud (95%)
Outcome: settled
Civil penalty: $250,000
Victim loss: $2,600,000,000
Ticker: MGY

Classified investment-adviser-fraud(confidence 95%). EDGAR detection: forms ADV/ADV-E/ADV-W/Form D· recall 33% / precision 13%. detection rule →

Extracted insights

Dollar amounts 2

$2.60B $2.6 billion ≥$1B
$250K $250,000 $100K–$1M

Entities 5

company 450,000 shares of magnolia oil & gas corporation
company magnolia oil & gas corporation
person registered investment adviser
person sourcerock funds
company sourcerock group, llc

Triples 10

Sourcerock Group, LLC is registered investment adviser
Sourcerock Group, LLC advises Sourcerock Funds
Sourcerock Group, LLC reported approximately $2.6 billion in regulatory assets under management
Sourcerock Group, LLC sold short 123,800 Magnolia shares
Sourcerock Group, LLC purchased 450,000 shares of Magnolia Oil & Gas Corporation
Sourcerock Group, LLC violated Rule 105 of Regulation M under the Exchange Act
Sourcerock Group, LLC shall pay civil money penalty of $250,000
Sourcerock Funds benefited from acquiring Magnolia shares at a discount
Magnolia Oil & Gas Corporation announced proposed underwritten offering of 7,500,000 shares
Sourcerock Group, LLC submitted Offer of Settlement

PDF

In re SOURCEROCK GROUP · Source

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Extracted body text (9,255c)

UNITED STATES OF AMERICA
Before the

SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934
Release No. 103629 / August 4, 2025

ADMINISTRATIVE PROCEEDING
File No. 3-22502

In the Matter of

SOURCEROCK GROUP,
LLC

Respondent.

ORDER INSTITUTING CEASE-AND-
DESIST PROCEEDINGS PURSUANT TO
SECTION 21C OF THE SECURITIES
EXCHANGE ACT OF 1934, MAKING
FINDINGS, AND IMPOSING A CEASE-
AND-DESIST ORDER

The Securities and Exchange Commission (“Commission”) deems it appropriate that cease-
and-desist proceedings be, and hereby are, instituted pursuant to Section 21C of the Securities
Exchange Act of 1934 (“Exchange Act”), against Sourcerock Group, LLC (“Sourcerock” or
“Respondent”).

II.

In anticipation of the institution of these proceedings, Respondent has submitted an Offer
of Settlement (“Offer”), which the Commission has determined to accept. Solely for the purpose of
these proceedings and any other proceedings brought by or on behalf of the Commission, or to
which the Commission is a party, and without admitting or denying the findings herein, except as
to the Commission’s jurisdiction over it and the subject matter of these proceedings, which are
admitted, Respondent consents to the entry of this Order Instituting Cease-and-Desist Proceedings
Pursuant to Section 21C of the Securities Exchange Act of 1934, Making Findings, and Imposing a
Cease-and-Desist Order (“Order”), as set forth below.

III.

On the basis of this Order and Respondent’s Offer, the Commission finds1 that:

1 The findings herein are made pursuant to Respondent’s Offer of Settlement and are not binding
on any other person or entity in this or any other proceeding.

Summary

1. These proceedings concern a violation of Rule 105 of Regulation M under the

Exchange Act [17 C.F.R. § 242.105] (“Rule 105”) by Sourcerock, a registered investment adviser.
In November 2022, Sourcerock purchased equity securities for the accounts of six of its private
fund clients (“Sourcerock Funds”) in a covered offering after Sourcerock had sold short the same
securities on behalf of the Sourcerock Funds during Rule 105’s restricted period.

Respondent

2. Sourcerock, a Delaware limited liability company based in Denver, Colorado, is

registered with the Commission as an investment adviser and advises the Sourcerock Funds. In its
most recent annual updating amendment to Form ADV filed on March 26, 2025, Sourcerock
reported having approximately $2.6 billion in regulatory assets under management.

Rule 105

3. Rule 105 makes it unlawful for any person to purchase equity securities from an
underwriter, broker, or dealer participating in a covered public offering if that person sold short the
security that is the subject of the offering during the restricted period as defined in the rule, absent
meeting the conditions of an exception. See 17 C.F.R. § 242.105(a) and (b). The Rule 105
“restricted period” is the shorter of the period: (1) beginning five business days before the pricing
of the offered securities and ending with such pricing; or (2) beginning with the initial filing of a
registration statement or notification on Exchange Act Form 1-A or 1-E and ending with the
pricing. See 17 C.F.R. § 242.105(a)(1) and (a)(2).

4. The Commission adopted Rule 105 “to foster secondary and follow-on offering

prices that are determined by independent market dynamics and not by potentially manipulative
activity.” Short Selling in Connection with a Public Offering, Exchange Act Release No. 34-
56206, 72 Fed. Reg. 45094 (Aug. 10, 2007) (effective Oct. 9, 2007). Rule 105 is prophylactic and
prohibits the conduct irrespective of the short seller’s intent. See id.

Facts

5. After market close on November 3, 2022, Magnolia Oil & Gas Corporation

(“Magnolia”) (NYSE: MGY) announced a proposed underwritten offering of 7,500,000 shares
(“Magnolia Offering”). Before market open on November 4, Magnolia priced the shares for the
Magnolia Offering. The Rule 105 restricted period for the Magnolia Offering, therefore, was from
October 28, 2022, through November 3, 2022 (“Magnolia Restricted Period”).

6. Between November 1 and 2, 2022, during the Magnolia Restricted Period,

Sourcerock sold short 123,800 Magnolia shares on behalf of the Sourcerock Funds.

7. On November 4, 2022, Sourcerock purchased a total of 450,000 shares as part of
the Magnolia Offering in the same Sourcerock Funds in which Sourcerock had engaged in short
selling during the Magnolia Restricted Period.

8. Sourcerock did not qualify for an exception to Rule 105 when Sourcerock

purchased shares for the accounts of the Sourcerock Funds in the Magnolia Offering.

9. The Sourcerock Funds improperly benefited from Sourcerock’s trading set forth

above by acquiring Magnolia shares at a discount from the market price.

Violations

10. As a result of the conduct described above, Sourcerock violated Rule 105 of
Regulation M under the Exchange Act.

Sourcerock’s Cooperation and Remedial Efforts

11. In determining to accept the Offer, the Commission considered Sourcerock’s

cooperation with the staff’s investigation. For example, Sourcerock cooperated with the staff’s
investigation by voluntarily gathering documents and communications, conducting a review for
prior violations (of which none were found), and presenting to the staff, including on the firm’s
efforts at compliance.

12. In determining to accept the Offer, the Commission also considered Sourcerock’s

remediation. After Sourcerock discovered the Rule 105 violation, it undertook certain remedial
acts, including promptly conducting a review of its trading history and updating its related trading
processes. Sourcerock also updated its compliance policies and procedures to prevent future
violations of Rule 105.

IV.

In view of the foregoing, the Commission deems it appropriate to impose the sanctions
agreed to in Respondent’s Offer.

Accordingly, it is hereby ORDERED that:

A. Pursuant to Section 21C of the Exchange Act, Respondent cease and desist from
committing or causing any violations and any future violations of Rule 105 of Regulation M under
the Exchange Act.

B. Respondent shall, within 10 days of the entry of this Order, pay a civil money
penalty in the amount of $250,000 to the Securities and Exchange Commission for transfer to the
general fund of the United States Treasury, subject to Exchange Act Section 21F(g)(3). If timely
payment is not made, additional interest shall accrue pursuant to 31 U.S.C. § 3717. Payment must
be made in one of the following ways:

(1) Respondent may transmit payment electronically to the Commission, which
will provide detailed ACH transfer/Fedwire instructions upon request;

(2) Respondent may make direct payment from a bank account via Pay.gov

through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or

(3) Respondent may pay by certified check, bank cashier’s check, or United

States postal money order, made payable to the Securities and Exchange
Commission and hand-delivered or mailed to:

Enterprise Services Center
Accounts Receivable Branch
HQ Bldg., Room 181, AMZ-341
6500 South MacArthur Boulevard
Oklahoma City, OK 73169

Payments by check or money order must be accompanied by a cover letter identifying

Sourcerock as a Respondent in these proceedings, and the file number of these proceedings; a copy
of the cover letter and check or money order must be sent to Kimberly L. Frederick, Assistant
Director, Division of Enforcement, Securities and Exchange Commission, 1961 Stout St., Suite
1700, Denver, CO 80294.

C. Amounts ordered to be paid as civil money penalties pursuant to this Order shall be
treated as penalties paid to the government for all purposes, including all tax purposes. To preserve
the deterrent effect of the civil penalty, Respondent agrees that in any Related Investor Action, it
shall not argue that it is entitled to, nor shall it benefit by, offset or reduction of any award of
compensatory damages by the amount of any part of Respondent’s payment of a civil penalty in
this action (“Penalty Offset”). If the court in any Related Investor Action grants such a Penalty
Offset, Respondent agrees that it shall, within 30 days after entry of a final order granting the
Penalty Offset, notify the Commission's counsel in this action and pay the amount of the Penalty
Offset to the Securities and Exchange Commission. Such a payment shall not be deemed an
additional civil penalty and shall not be deemed to change the amount of the civil penalty imposed
in this proceeding. For purposes of this paragraph, a “Related Investor Action” means a private
damages action brought against Respondent by or on behalf of one or more investors based on
substantially the same facts as alleged in the Order instituted by the Commission in this
proceeding.

By the Commission.

Vanessa A. Countryman
Secretary

http://www.sec.gov/about/offices/ofm.htm

UNITED STATES OF AMERICA
In the Matter of
SOURCEROCK GROUP, LLC
Respondent.
IV.

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