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

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Wednesday, January 6, 2010

Former CFO of Investment Adviser Settles SEC Charges She Aided CEO's Misappropriation of Funds

The SEC settled administrative charges against Mary Beth Stevens, the former chief financial officer and chief compliance officer of investment adviser AA Capital Partners Inc. (AA Capital), finding that Stevens aided and abetted the misappropriation of more than $23 million by AA Capital and its former president, John Orecchio (Orecchio).  According to the SEC Order, between May 2004 and September 2006, Stevens facilitated Orecchio's and AA Capital's misappropriation of more than $23 million belonging to AA Capital's clients by improperly withdrawing funds from AA Capital's client trust accounts and transferring those funds for Orecchio's personal benefit and to pay the firm's operating expenses. The Order further finds that Stevens falsely characterized the withdrawals in the monthly account statements she prepared and sent to AA Capital's clients as "capital calls" for legitimate investments.

The Order also finds that Stevens did not fulfill her responsibility as AA Capital's chief financial officer to properly maintain the firm's books and records and that Stevens' failure to keep up-to-date books and records helped conceal Orecchio's and AA Capital's misappropriations from clients.

The Order requires Stevens to pay disgorgement of $79,583.50, prejudgment interest of $22,472.24, and a civil penalty of $50,000. Stevens consented to the issuance of the Order without admitting or denying any of the findings.

http://lawprofessors.typepad.com/securities/2010/01/former-cfo-of-investment-adviser-settles-sec-charges-she-aided-ceos-misappropriation-of-funds.html

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