The SEC has established a proposed Fair Fund plan via which disgorgement, prejudgment interest and civil penalties will be distributed to those who claim they suffered losses from the purchase of variable annuities sold fraudulently by GilmanCiocia, subsidiary Prime Capital Services and four representatives. CEO Michael Ryan and Chief Compliance Officer Rose Rudden have been barred from supervisory capacity in any broker dealer or investment advisor for one year in the same case.
These actions stems from an SEC finding that from November 1999 through February 2007 four representatives associated with PCS and employed by Gilman fraudulenty sold variable annuities to senior citizen customers. The investments were highly unsuited for persons that age and the SEC found the representatives misrepresented the annuities and omitted important facts and that the limited access to principal was against some clients' expressed wishes.
As a result, PCS was ordered to pay a total of $144,262.58 in disgorgement and prejudgment interest and Gilman, $450,001 in disgorgement and civil penalties. A fund administrator will determine losses suffered by investors, along with any costs, such as attorney fees, incurred in pursuing complaints against the companies. Investors will be paid on a pro rata basis for charges for the investments and if funds are left over, they will be repaid for expenses, also on a pro rata basis.
Earlier this year, the SEC issued a one-year suspension to Christie A. Andersen, who had been chief compliance officer at the Boca Raton, Fla., branch office. The representatives, Eric Brown, Matthew Collins, Kevin Walsh and Mark Wells were ordered to disgorge respectively, $41,992, $2,915, $24,790 and $6,609.
Each was ordered to pay a civil penalty of $130,000 and all were barred from association with any broker, dealer, or investment adviser; ordered to cease and desist from violations of the antifraud and books and records provisions of SEC laws.
Bob Scott has provided information to the tax and accounting community since 1991, first as technology editor of Accounting Today, and from 1997 through 2009 as editor of its sister publication, Accounting Technology. He is known throughout the industry for his depth of knowledge and for his high journalistic standards. Scott has made frequent appearances as a speaker, moderator and panelist and events serving tax and accounting professionals. He has a strong background in computer journalism as an editor with two former trade publications, Computer+Software News and MIS Week and spent several years with weekly and daily newspapers in Morris County New Jersey prior to that. A graduate of Indiana University with a degree in journalism, Bob is a native of Madison, Ind
