Securities Law Prof Blog

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

A Member of the Law Professor Blogs Network

Monday, October 19, 2009

SEC Brings Failure to Supervise Charges Against Ferris Baker Watts GC

The SEC Enforcement Division instituted an administrative proceeding against Theodore W. Urban, who allegedly was the General Counsel and a member of the Board of Directors and Credit Committee of Ferris Baker Watts, Inc. (Ferris), a registered broker-dealer and investment adviser. According to the complaint, from at least August 2002 through November 2005, Ferris registered representative Stephen J. Glantz (Glantz), David A. Dadante (Dadante), who was one of Glantz's customers, and a registered representative at another brokerage firm all participated in a scheme to manipulate the market for the stock of Innotrac Corp. (Innotrac). The Division of Enforcement further alleges that all three pled guilty to violations of Section 10(b) of the Securities Exchange Act of 1934 and in their plea agreements, they all admitted that they artificially inflated and maintained the price for Innotrac stock.

The Division of Enforcement alleges that Urban had the requisite degree of responsibility, ability or authority at Ferris to affect the conduct of Glantz and, thus, was a supervisor of Glantz. The Division of Enforcement alleges that Urban failed to respond reasonably to red flags regarding Glantz's misconduct and lack of supervision, including, among others, those raised in a May 23, 2003 Ferris Compliance Department memorandum and in numerous communications from Compliance Department and other Ferris personnel. As a result of this conduct, the Division of Enforcement alleges that Urban failed reasonably to supervise Glantz with a view to detecting and preventing Glantz's violations of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.

A hearing will be scheduled before an administrative law judge to determine whether the allegations contained in the Order are true, to provide Urban an opportunity to establish any defense to these allegations, and to determine what, if any, remedial action is appropriate in the public interest against Urban.

http://lawprofessors.typepad.com/securities/2009/10/sec-brings-failure-to-supervise-charges-against-ferris-baker-watts-gc.html

SEC Action | Permalink

TrackBack URL for this entry:

http://www.typepad.com/services/trackback/6a00d8341bfae553ef0120a5f6ec4a970b

Listed below are links to weblogs that reference SEC Brings Failure to Supervise Charges Against Ferris Baker Watts GC:

Comments

Post a comment