Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Tuesday, September 18, 2007

SEC Obtains TRO Against Hawaii-Based Investment Adviser

The SEC announced that on September 14, 2007, following a hearing on the Commission's application for a temporary retraining order, the Honorable Helen Gillmor, Chief Judge of the United States District Court for the District of Hawaii, issued the order against a Honolulu-based investment adviser representative and his company.  The SEC filed an emergency action on September 7 against Mark K. Teruya ("Teruya")and his company, Senior Resources of Hawaii, Inc. ("Senior Resources"), alleging that the defendants' engaged in fraudulent activities targeted at seniors and received substantial undisclosed commissions. According to the SEC's complaint, since at least 2004 and continuing as recently as August 2007, Teruya, through Senior Resources, has on multiple occasions fraudulently induced clients to sign a series of pre-printed, fill-in-the-blank forms by misrepresenting the purpose of the forms. The complaint alleges that Teruya used the signed forms to sell the seniors' existing securities holdings without their knowledge or authorization. The complaint also alleges that Teruya, who is also a licensed insurance agent, then used the proceeds of the unauthorized sales to purchase equity-indexed annuities for which he received substantial, undisclosed commissions. Since 2004, defendants have earned $2 million in undisclosed commissions on EIA sales.

The Court's order temporarily restrains the defendants from future violations of the antifraud provisions of the federal securities laws, 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 Section 206(1) and (2) of the Investment Advisers Act of 1940. The order also prohibits the destruction of documents.

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