Securities Law Prof Blog

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

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Thursday, May 21, 2009

SEC Charges Brokers with Unauthorized Trading in Customers' Accounts

On May 19, 2009, the SEC filed a complaint alleging that Guillermo David Clamens, FTC Capital Markets, Inc., a registered broker-dealer he controls, ("FTC"), and Lina Lopez, an FTC employee, engaged in a fraudulent scheme to engage in tens of millions of dollars of unauthorized securities trading through the accounts of two FTC customers. Clamens and Lopez defrauded FTC's customers in part to conceal their prior fraudulent sale of $50 million in non-existent notes to a Venezuelan bank through another Clamens-controlled entity, Emerging Markets. When the fictitious notes held by the Venezuelan bank purportedly came due in August 2008, Clamens misappropriated $50 million from FTC's customers to fund the redemption. In addition, the Complaint alleges that Emerging Markets is an unregistered broker-dealer.

As a result of this conduct, the Complaint alleges that defendants FTC, Emerging Markets, Clamens and Lopez violated Section 17(a) of the Securities Act of 1933 ("Securities Act"), Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder; defendant FTC violated Section 15(c) of the Exchange Act; defendant Emerging Markets violated Section 15(a) of the Exchange Act; and defendants Clamens and Lopez aided and abetted FTC's violations of Exchange Act Section 15(c) and Emerging Markets' violations of Exchange Act Section 15(a). In its Complaint, the Commission seeks permanent injunctions, disgorgement and prejudgment interest and civil penalties against all defendants.

http://lawprofessors.typepad.com/securities/2009/05/sec-charges-brokers-with-unauthorized-trading-in-customers-accounts.html

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