In 2021, Thomas J. Powell, chairman of the Brehon Group, signed a settlement with the Securities and Exchange Commission. That agreement included a standard gag clause barring him from disputing the agency's allegations. This May, the SEC unexpectedly lifted that restriction, allowing Powell to share his story for the first time.
Powell's firm was not an oil and gas company. It provided investor management and capital structure advice to growing companies. Starting in 2012, they served a Texas firm that sponsored oil and gas funds; Powell's company managed the investment vehicles. The oil and gas expertise belonged to the sponsor.
In 2016, the SEC began looking into self-directed IRAs holding nontraditional assets, some tied to the funds Powell's firm serviced. Believing they were merely assisting the investigation, Powell soon discovered he was a direct target—a realization that took years to surface. “You can cooperate with a regulator and never realize you are the one in its sights,” he says.
The cost was staggering: over 300,000 documents produced, dozens of subpoenas, and more than $4 million in outside legal fees. Powell now warns other founders about the instinct to accept responsibility for entire organizations. When SEC staff asked who was “ultimately responsible” for marketing materials or valuations, Powell answered that he was—even though he didn't draft them. The SEC used that admission to build its case. His advice: respond literally, and own only what you actually did.
As the statute of limitations neared, the SEC threatened charges. Powell's counsel warned that fighting could cost another five years and $10 million. Facing those terms, he settled on a “neither admit nor deny” basis, admitting only jurisdiction. But in a now-deleted SEC release, the qualifier “without admitting or denying” disappeared, making allegations appear as fact. Powell warns founders not to assume that proper conduct ensures the truth prevails. His fine was small, but the reputational damage was not. He hopes his story spares others that costly education.
For executives navigating regulatory scrutiny, Powell's experience underscores the importance of understanding the process and guarding against broad admissions. As investigations can shift focus unexpectedly, founders should seek counsel experienced in SEC tactics and be cautious in their responses. The stakes are high, and the lessons are hard-won.
