The Securities and Exchange Commission has barred the chief compliance officer of a broker-dealer from the industry for aiding his brothers’ securities fraud scheme.
According to the SEC’s March 24 order, the fraudulent offering was conducted by three Quigley brothers: William, Michael and Brian. William served as director of compliance at Trident Partners, a registered broker-dealer in Long Island, New York, from June 2004 through September 2005 and again from October 2007 until September 2014.
During the relevant period, William was also the firm’s anti-money laundering officer, the SEC states. In a parallel criminal action, he was recently sentenced to six months in prison over his role in the scheme.
The SEC charges that the respondent used his “privileged position as a broker-dealer’s chief compliance officer to create accounts and move funds without supervision,” noted Cipperman Compliance Services, in commenting on the order. “The SEC asserts that he created ‘house’ accounts and mis-labeled wires to hide the scheme. The SEC charges that the CCO thereby aided and abetted violations of the anti-fraud, reporting, and books and records rules.”
The two other brothers solicited investors to purportedly invest in various securities, including well known “blue chip” issuers as well as “start-up” companies supposedly were on the verge of going public, according to the order.
Michael and Brian “never purchased any of the offered securities for the investors, and the claims of imminent public offerings were lies. All of the investors’ funds were misappropriated by the Quigleys, including William Quigley.”
As part of the scheme, the investors were instructed to wire their investment funds to U.S. bank and brokerage accounts that William had set up and controlled.
“Certain investors were issued phony brokerage statements showing that they had growing investment balances. When investors tried to liquidate the securities they had been led to believe they owned, they were given one excuse after another as to why their funds, which had already been stolen, could not be returned to them,” the order states.
The three “repeatedly duped at least four unsophisticated foreign investors into sending funds to various U.S. bank and brokerage accounts for purported investments in the securities of publicly-traded companies, investment funds and private start-up companies supposedly slated to go public,” the order continues.
The Quigleys claimed to be associated with “numerous non-existent entities, including fictional broker-dealers, and claimed to have various colleagues at these firms (with names including James Morris and Kevin Turner) who appear to have been invented as well.”
On March 24, William pleaded guilty to criminal conduct relating to the findings in the order.
In connection with the guilty plea, he was ordered by the United States District Court for the Eastern District of New York to forfeit, to the United States, about $356,900.