Securities Law Prof Blog

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

Monday, March 9, 2009

SEC Charges Investment Adviser Made Up Billion-Dollar Client

The SEC filed a civil injunctive action against Locke Capital Management, Inc., an investment adviser, and Leila C. Jenkins, its founder and sole owner who currently serves as its President, Chief Executive Officer, and Chief Investment Officer. The Complaint alleges that Jenkins invented a billion-dollar client in order to gain credibility and attract legitimate investors. The Complaint further alleges that Jenkins tried to perpetuate her scheme by lying to the Commission staff about the existence of the invented client and furnishing the staff with bogus documents in 2008, including fake custodial statements that she created on her laptop.

Besides the invented client and assets under management, the Complaint alleges several other lies Jenkins and her firm told to investors. These include misrepresenting Locke's performance for years in which Locke had no clients and deceiving clients about the makeup of the firm, including the number, identity, and role of its employees.

The Complaint seeks a permanent injunction against future violations of the securities laws, disgorgement of ill-gotten gains and prejudgment interest thereon, and a civil monetary penalty.

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