Smoke River Ranch Challenges Oklahoma Securities Investigation
- mike33692
- 4 days ago
- 3 min read
Smoke River Ranch Challenges Oklahoma Securities Investigation Over Herdshare Program
A northeast Oklahoma ranch says it is fighting an investigation by the Oklahoma Department of Securities over whether its community-based herdshare program should be regulated as a financial investment instead of an agricultural operation.
The Smoke River Ranch herdshare program has drawn national attention after ranch owner Joel Hollingsworth publicly stated that state regulators have issued subpoenas and investigation letters. No formal charges have been filed, and the Oklahoma Department of Securities has not publicly announced an enforcement action against the ranch.
What Is A Smoke River Ranch Herdshare?
According to Smoke River Ranch, the operation allows participating families to jointly own cattle through what it describes as a custom grazing and "calf split" model.
Instead of purchasing beef at a grocery store, participants purchase an ownership interest in cattle while the ranch provides boarding, grazing and herd management. As calves are born, ownership is divided among participants based on their agreements.
Hollingsworth says the model was created to help families produce food together while reducing dependence on the commercial food system.
Herdshare agreements have long been used in some states, particularly for raw milk and direct-to-consumer agriculture. Whether a specific herdshare arrangement is considered a traditional agricultural agreement or a regulated investment contract depends on how it is structured and marketed.
Why Oklahoma Securities Regulators Are Investigating
While the Oklahoma Department of Securities has not publicly commented on the investigation, the legal issue appears to center on whether the ranch's herdshare model qualifies as a security under state law.
Under long-established court precedent known as the Howey Test, an arrangement may be considered an investment contract if people invest money in a common enterprise with an expectation of profits generated primarily through the efforts of others.
That legal standard has been applied over the years to investments involving agriculture, livestock and other nontraditional assets.
The issue has gained additional attention following the collapse of Agridime, a Texas-based cattle investment company accused by federal regulators of operating a $191 million Ponzi scheme. Oklahoma securities officials assisted in that investigation, which resulted in federal enforcement actions and restitution orders. While the two operations involve cattle, there have been no public allegations that Smoke River Ranch operated a Ponzi scheme or defrauded investors.
The central legal question is whether Smoke River's herdshare program is primarily an agricultural ownership arrangement or an investment contract subject to securities regulation.
Ranch Says It Will Continue Fighting Investigation
Hollingsworth says the investigation began after a homesteading influencer shared a video featuring the ranch's community-based farming model.
In a public statement, he said the ranch has been receiving subpoenas and investigation letters since February. He also said attorneys working with the Farm-to-Consumer Legal Defense Fund confirmed investigators told them there have been no consumer complaints, no alleged victims and no allegations of fraud. Those statements reflect the ranch's account of the investigation and have not been independently confirmed by the Oklahoma Department of Securities.
Supporters, including several national agriculture organizations, argue that herdshare agreements are longstanding agricultural arrangements that allow families to participate directly in food production rather than financial investing.
As of Monday, no criminal or civil charges have been filed against Hollingsworth or Smoke River Ranch, and the investigation appears to remain in its preliminary stages.
The outcome could have broader implications for how herdshare agreements and other direct-to-consumer agricultural partnerships are viewed under Oklahoma law.