Foothills Resources investigating alleged unauthorized trading of stock

By Sheri Kasprzak

New York, Feb. 21 - Foothills Resources, Inc. said it is looking into possible unauthorized trading of securities connected to an April 2006 private placement.

Foothills reported in a statement released Wednesday that 1.75 million shares issued in the placement were issued without restrictive legends that would prevent the shares from being resold without an effective registration statement.

The shares had been issued to Strong Branch Ventures IV LLC, an entity controlled by Louis Zehil, former partner at McGuire Woods LLP, legal counsel to the company for the placement.

Strong Branch bought 1 million units in the placement and bought another 1.75 million shares through the exercise of warrants associated with the offering.

"The company has commenced a review into this matter and any findings material to the company will be reported when the review is complete," Foothills' statement said. "The company has engaged Akin Gump Strauss Hauer & Feld to assist it in this matter. Because this review is in its early stages, the information available to use may not be complete and our review may uncover additional information."

In the placement, the company sold a total of 17,142,857 units of one share and one three-quarters share warrant.

News of Foothills' review comes just a day after MMC Energy, Inc. said it is also investigating Zehil for improperly causing shares related to a May 2006 PIPE to be resold.

Zehil has not returned calls requesting comment on the allegations.

Based in Bakersfield, Calif., Foothills is an oil and natural gas exploration company.

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