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SEC Fines Firm, Unregistered BDs $6 Million

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The SEC settled charges on Thursday with a corporate bond group and 21 third parties related to the buying and selling of fixed-income securities without proper registration.

Global Fixed Income of Chicago, its owner Charles Perlitz Kempf and the third-party participants agreed to pay nearly $5 million in disgorgement of profits and about $1 million in penalties.

An SEC investigation found that Global Fixed Income entered into agreements with third parties that acted as unregistered broker-dealers on its behalf and bought billions of dollars’ worth of newly issued bonds. The offerings were often oversubscribed, so Global Fixed Income could sell or “flip” the bonds within a few days for a small profit; it split profits with the third-party participants.

“Global Fixed Income essentially hired firms to act as brokers on its behalf and purchase billions of dollars of newly issued bonds to increase profitability in the bond market, yet none of the firms or their employees were registered to legally act as brokers,” said Michele W. Layne, director of the SEC’s regional office in Los Angeles, in a statement.

According to the SEC, the sales took place from July 2009 to June 2012.

Global Fixed Income, Kempf, and the third-party participants consented to the orders and did not admit or deny the SEC’s findings. The SEC’s order suspends Kempf from associating with a registered entity or participating in a penny stock offering for 12 months.

The third-party participants found in violations of certain SEC regulation include the following nine companies and 12 individuals: 

  • AGS Capital Group, based in Florida, and owner Allen Gabriel Silberstein of Miami.
  • Banes Capital Management, based in Tennessee, owner Joel Banes of Memphis and Michael Warner Kochman of Springfield, New Jersey, an investment adviser at the time.
  • Big Star Capital of Florida and owner Ryan Patrick McGuinness of Tampa.
  • Esso Ventures of California and owner Mark Leonard Lechler of Pasadena.
  • Etek Investment Management of New Jersey, its part-owners Kevin Gregory Haley of Jenkintown, Pennsylvania, and David Boyle of Blackwood, New Jersey.
  • Finmark Resources of New Jersey and owner Peter Eric Baker of New Jersey.
  • Parker Paschal & Co. of Louisville and owner Andrew Parker Shook of Louisville.
  • PMK Capital Management of Florida and majority owner Roger Kumar Jr. of Ocean Ridge, Florida.
  • RLJ Fixed Income of Bethesda, Maryland, and Vice President Corey Antwuan Printup.
  • Joseph Michael Araiz of New York, a former owner and CEO of an investment adviser no longer in business.

The SEC’s investigation was conducted by David Rosen and supervised by Finola H. Manvelian of Los Angeles.  

— Check out Merrill Fined $2.5M Over Unapproved ‘Double Production’ Talks on ThinkAdvisor,