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

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Wednesday, October 1, 2008

SEC Settles Fraud Case Involving Pennsylvania School Districts

The SEC charged Stephen R. Moynahan, the former president and chief executive officer of Dolphin & Bradbury, Incorporated, formerly a registered broker-dealer based in Philadelphia, for failing reasonably to supervise Robert J. Bradbury, an investment banker and co-owner of the firm, who defrauded certain unsophisticated investors, including Pennsylvania school districts.  According to the Commission's Order, Bradbury engaged in a fraudulent scheme in which he offered and sold primarily to various Pennsylvania school districts a series of risky, short-term, tax-exempt notes underwritten by Dolphin & Bradbury to finance a speculative golf course project. As president of Dolphin & Bradbury, Moynahan was generally responsible for firm supervision, and the firm's procedures expressly assigned certain supervisory duties to him. Although Moynahan was responsible for reviewing exception reports, he failed to read an exception report that explicitly flagged the purchase of the notes as potentially unsuitable investments for the school districts. Without admitting or denying the Commission's findings, Moynahan consented to the entry of an Order by the Commission that includes a civil money penalty of $140,000.

The Commission filed a civil injunctive action against Bradbury and others in August 2006 alleging that Bradbury defrauded the Pennsylvania school districts and charging him with violating the antifraud provisions of the federal securities laws.

http://lawprofessors.typepad.com/securities/2008/10/sec-settles-fra.html

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