Securities Law Prof Blog

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

Tuesday, September 14, 2010

SEC Settles Unauthorized Trading & Fraud Charges Against Unregistered Broker-Dealer

The SEC announced that on August 26, 2010, the U.S. District Court for the Southern District of New York entered final judgments approving settlements between the Commission and the defendants in the pending case against FTC Capital Markets, Inc. ("FTC"), FTC Emerging Markets ("Emerging Markets"), Guillermo David Clamens, and Lina Lopez. The judgments against Clamens, FTC and Emerging Markets order those defendants to pay over $20 million in disgorgement and penalties but provide for full satisfaction of their monetary obligations by defendants' release of their assets frozen at the start of the case and any other assets in the United States. The final judgments, to which the defendants consented without admitting or denying allegations in the Commission's complaint, also permanently enjoin all the defendants from future violations of the relevant provisions of the federal securities laws.

The Commission filed the action on May 19, 2009, charging Clamens, FTC, a registered broker-dealer controlled by Clamens, and Lopez, an FTC employee, with a fraudulent scheme to engage in tens of millions of dollars of unauthorized securities trading through the accounts of two FTC customers. According to the Commission's complaint, Clamens and Lopez defrauded the two FTC customers in part to conceal their prior fraudulent sale of $50 million in non-existent notes to a Venezuelan bank through defendant Emerging Markets, another Clamens-controlled entity. When the fictitious notes held by the Venezuelan bank purportedly came due in August 2008, Clamens allegedly misappropriated $50 million from the two FTC customers to fund the redemption. In addition, the Complaint alleged that Emerging Markets illegally acted as an unregistered broker-dealer.

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