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SEC Halts Ongoing Securities Fraud by Stock Broker

The United States Securities and Exchange Commission secured a court order effectively halting an ongoing securities fraud run by a licensed stock broker.

In its Complaint, the SEC alleges that broker Sean Kelly utilized entities he controlled to raise at least $1 million in investment capital from 12 investors, which included elderly retirees, representing that he would use their funds to invest in real estate funds and private placements.  Instead, according to the SEC, Kelly blew investor money on personal expenses, including football tickets, high-end vacations, and cash withdrawals.  The SEC further contends that Kelly continued to misappropriate and misuse investor money even after receiving an SEC subpoena, and failed to appear for his sworn SEC testimony notwithstanding his promise that he would show up and “come clean.”

The federal criminal authorities joined the fray and filed charges against Kelly in a parallel action on the same day as the SEC filed.  Kelly has been arrested.

The SEC filed its complaint in the Northern District of Georgia.  It charges Kelly with violations of the antifraud provisions of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1) and (2) of the Investment Advisers of 1940. The SEC complaint also charges Kelly’s companies with violations of those same statutes, or aiding and abetting certain of Kelly’s underlying violations.

The court granted the SEC’s prayer for an asset freeze, temporary restraining order, and an accounting. The SEC also has sought preliminary and permanent injunctions, disgorgement of ill-gotten gains and civil penalties against Kelly.

Typically, receipt of an SEC Subpoena is enough to immediately stop an individual from continuing to engage in fraudulent conduct and cause for retention of an SEC defense lawyer.  Evidently, it was not a sufficient deterrent for Mr. Kelly, who was apparently not phased by the fact that the SEC was hot on his trail.  What was he thinking?

If you have received an SEC Subpoena, it is imperative that you understand the SEC investigatory process as well as your legal rights.  David R. Chase, a former SEC prosecutor and now SEC defense attorney, knows how the SEC investigates, prosecutes and settles its cases.​  He works strategically to walk his clients out of the SEC’s crosshairs.

The Law Firm of David R. Chase, an SEC defense law firm in Fort Lauderdale, Florida, is run by SEC defense attorney David Chase who represents individuals around the world who are under investigation by the SEC.  Call SEC defense attorney David Chase toll-free at: 800-760-0912 for a confidential and no cost initial consultation, or at david@davidchaselaw.com.