© 2013 The Texas Lawbook.
By Mark Curriden, JD
Senior Writer for The Texas Lawbook
Three former senior executives with Houston-based Stanford Group Companies are liable for securities fraud in connection with the marketing and selling of fraudulent CDs issued by the Antiguan bank controlled by convicted Ponzi schemer Allen Stanford, an administrative law judge with the U.S. Securities and Exchange Commission ruled late Friday.
SEC Administrative Law Judge Carol Fox Foelak has ruled that the executives are barred from the industry and ordered to pay a total of more than $4.7 million in fines and restitution.
The three executives are Daniel Bogar, the former president of SGC, which was an SEC-registered broker-dealer; Bernerd Young, SGC’s former chief compliance officer; and Jason Green, the former president of SGC’s private client group.
Judge Foelak found that the three willfully created or approved promotional materials that were provided to investors that falsely portrayed the CDs as being backed by strong liquid assets and insurance. The judge also found that they ignored numerous red flags calling into question the truthfulness of Allen Stanford’s claims about the CDs.
In her order, the judge did point out that Bogar and Green cooperated with the FBI in its investigation and that agents believed they were helpful in their assistance.
“The judge concluded that they fraudulently promoted and sold the Stanford CDs to SGC’s unsuspecting customers,” said David Peavler, Associate Director of the SEC’s Fort Worth Regional Office, which tried the case.
“This case highlights the responsibilities broker-dealers have in offering and selling securities to their customers. Today’s decision should serve as a reminder that broker-dealers cannot ignore obvious red flags about the products they are selling.”
Houston securities lawyer Thomas Taylor III is defending Bogar. Houston lawyer J. Randall Henderson is representing Young. New Orleans lawyer George Freeman III is advising Green.
The SEC enforcement lawyers leading the case are David Reece, B. David Fraser, Chris Davis, and Janie Frank.
Judge Foelak’s full opinion can be read here: http://www.sec.gov/alj/aljdec/2013/id502cff.pdf
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