Securities Law Blog

FTC Capital Markets Inc. (FTC), a midtown Manhattan based registered broker-dealer, and its Chairman Guillermo Clamens, also based in New York City, were found jointly liable for more than a $20 million judgment awarded to the Securities and Exchange Commission (SEC).

In May 2009, the SEC filed a civil injunction against FTC, Clamens, and FTC employee Lina Lopez for engaging in millions of dollars of unauthorized securities trading through the accounts of two FTC customers. The complaint alleges that the broker-dealer defrauded Citgo Petroleum Corp. and its parent company PDV Holdings Inc. Clamens, with the help of Lopez, purportedly knowingly prepared and sent the customers false account statements that omitted the unauthorized securities trades and falsely listed holdings exclusively in short-term, low risk, liquid investments of the type that the customers authorized FTC to make on its behalf.

The Commission claims that Clamens and Lopez defrauded FTC’s customers in part to conceal their prior fraudulent sale of $50 million in non-existent notes to a Venezuelan bank through an FTC affiliated entity and unregistered broker-dealer Emerging Markets. When the notes held by the Venezuelan bank came due in August 2008, Clamens allegedly misappropriated $50 million from FTC customers to fund the redemption.

The Ponzi-like scheme began to unravel around October 2008 when investors began requesting withdrawals from their accounts and there wasn’t enough cash to fulfill the requests.

Clamens and Lopez have also been charged criminally by federal prosecutors in the U.S. Attorney’s Office in Manhattan. Lopez pleaded guilty in October 2009 to conspiracy and securities fraud and awaits sentencing. Clamens has been ordered to pay $1.7 million in interest and penalties but is reported to remain at large.