UNITED STATES OF AMERICA

UNITED STATES OF AMERICA

Before the

SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934

Release No. 95044 / June 6, 2022

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.

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NOTICE OF PROPOSED PLAN OF

DISTRIBUTION AND

OPPORTUNITY FOR COMMENT

Notice is hereby given, pursuant to Rule 1103 of the United States Securities and

Exchange Commission’s (“Commission”) Rules on Fair Fund and Disgorgement Plans

(“Commission’s Rules”), 17 C.F.R. § 201.1103, that the Division of Enforcement has submitted

to the Commission a proposed plan of distribution (the “Proposed Plan”) for the distribution of

monies paid by Houston American Energy Corp. (“Houston American”), John F. Terwilliger, Jr.

(“Terwilliger”), Undiscovered Equities Inc. (“Undiscovered Equities”), and Kevin T. McKnight

(“McKnight”) (collectively, the “Respondents”) in the above-captioned matter.

On April 23, 2015, the Commission issued two Orders1 settling previously instituted

cease-and-desist proceedings2 against the Respondents stating that, between November 2009 and

April 2010, Houston American, Terwilliger and their agents, promoted Houston American’s

interest in a Colombian oil and gas production area known as “CPO-4 block.” Houston

American and Terwilliger made a series of fraudulent statements and omissions that materially

exaggerated CPO-4 block’s value to Houston American and downplayed any associated risks. In

doing so, Houston American entered into an agreement with Undiscovered Equities, a marketing

firm owned and operated by McKnight that specialized in small-cap stock promotion, to post on

its website and distribute to its subscribers a series of promotion articles about Houston

American and its investment in CPO-4 block. Undiscovered Equities disclosed that it was

1

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) and 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) (collectively,

the “Orders”).

2

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. 9621 (Aug. 4, 2014).

compensated by Houston American, but did not disclose the amount of compensation it received.

As a result of this conduct, Houston American’s stock price increased from approximately $4.00

per share to $20.00 per share, and its market capitalization increased from less than $150 million

to more than $600 million. As the truth about the CPO-4 block emerged, Houston American’s

stock price plummeted.

In their respective Orders, the Commission ordered Houston American to pay a civil

money penalty of $400,000, Terwilliger to pay a civil money penalty of $150,000, and McKnight

to pay a civil penalty of $22,500, for a total of $572,500 to the Commission.

The Respondents have paid a total of $572,500 to the Commission, as ordered.

On July 16, 2018, the Commission issued an order establishing a Fair Fund, pursuant to

Section 308(a) of the Sarbanes-Oxley Act of 2002, so the penalties paid could be distributed to

investors harmed by the Respondents’ conduct described in the Orders (the “Fair Fund”),

appointed Heffler Claims Group, as the fund administrator of the Fair Fund, and set the

administrator’s bond amount at $572,500.3

The assets of the Fair Fund are subject to the continuing jurisdiction and control of the

Commission. The Fair Fund and has been deposited in an interest-bearing account at the U.S.

Department of the Treasury’s Bureau of the Fiscal Service, and any interest accrued will be

added to the Fair Fund.

OPPORTUNITY FOR COMMENT

Pursuant to this Notice, all interested persons are advised that they may obtain a copy of

the Proposed Plan from the Commission’s public website at

http://www.sec.gov/litigation/fairfundlist.htm. Interested persons may also obtain a written copy

of the Proposed Plan by submitting a written request to Adriene Mixon, Esq., Assistant Chief

Litigation Counsel, United States Securities and Exchange Commission, 444 South Flower

Street, Suite 900, Los Angeles, CA 90071. All persons who desire to comment on the Proposed

Plan may submit their comments, in writing, no later than thirty (30) days from the date of this

Notice:

1.

to the Office of the Secretary, United States Securities and Exchange

Commission, 100 F Street, NE, Washington, DC 20549-1090;

2.

by using the Commission’s Internet comment form

(http://www.sec.gov/litigation/admin.shtml); or

3.

by sending an e-mail to rule-comments@sec.gov.

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Order Establishing a Fair Fund, Appointing a Fund Administrator and Setting Administrator's Bond Amount,

Exchange Act Rel. No. 83636 (July 16, 2018).

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Comments submitted by email or via the Commission’s website should include “Administrative

Proceeding File No. 3-16000” in the subject line. Comments received will be publicly available.

Persons should submit only information they wish to make publicly available.

THE PROPOSED PLAN

The Net Available Fair Fund4 is comprised of the $572,500.00 in civil money penalties

paid by the Respondents, plus interest and income earned thereon, less taxes, fees, and expenses

to investors who were harmed by the conduct described in the Orders. The Proposed Plan

provides for the distribution of the Net Available Fair Fund to compensate Eligible Claimants

based on their losses on shares of the Houston American common stock purchased during the

Relevant Period, November 10, 2009 through April 18, 2012, due to the misconduct of the

Respondents. The allocation methodology is substantially similar to the Court-approved

methodology developed for the Class Action.

For the Commission, by the Division of Enforcement, pursuant to delegated authority.5

Vanessa A. Countryman

Secretary

4

All capitalized terms used herein but not defined shall have the same meanings ascribed to them in the Proposed

Plan.

5

17 C.F.R. § 200.30-4(a)(21)(iii).

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