Securities Law Blog

The Securities and Exchange Commission filed fraud charges on July 23, 2008 and obtained an emergency court order to stop a Hillsborough, Calif., investment adviser who is alleged to have misappropriated more than $20 million from investors who were falsely promised that their money would be invested in the stock market. According to the Commission's complaint, Robert C. Brown, Jr. promised more than 200 investors that he would invest their money risk-free in stock or options. Instead, Brown allegedly misappropriated millions of dollars to pay for lavish personal expenses such as a Ferrari, limousine services and shopping trips. The also alleges that, in a classic Ponzi scheme tactic, Brown often transferred money from new investors to favored clients to create the illusion of profitable trading. The SEC's complaint charges Brown with violating the antifraud and investment advisory provisions of the federal securities laws, and seeks preliminary and permanent injunctions, disgorgement, and civil penalties. The Commission further seeks disgorgement of all investor funds disbursed to relief defendants, Duane Eddings, CDC Global, Inc. and Wise Investors Simply Excel, LLC. Pursuant to the court's order, a hearing will be held on August 5, 2008 to determine whether the defendants' activities will continue to be restricted during the remainder of the litigation.

The SEC Press Release is available at http://www.sec.gov/news/press/2008/2008-148.htm.

For more information on this subject contact securities attorneys, Michaels, Ward & Rabinovitz, LLP.