United States Securities and Exchange Commission
Securities Exchange Act of 1934
Release No. 46276 / July 29, 2002
File No. 3-10848
SEC Institutes Administrative Proceeding Against Michael D. Richmond Based on Entry of Injunction
The Securities and Exchange Commission today instituted an administrative proceeding against Michael D. Richmond based on the entry of an injunction against him in SEC v. Richmond et al. (Civil Action No. 98-11378-NG)(D. Mass.). In the Order, the Division of Enforcement alleges that on June 28, 2002, the court enjoined Richmond from further violations of the antifraud provisions of Section 17(a) of the Securities Act of 1933 (Securities Act) and Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder, the securities registration provisions of Sections 5(a) and 5(c) of the Securities Act and the broker-dealer registration provisions of Section 15(a) of the Exchange Act.
The Order further alleges that on July 15, 1998, the Commission filed its complaint alleging that Richmond, a former registered representative associated with Washington Square Securities, Inc. orchestrated a ponzi scheme offering unregistered securities in the form of International Certificates of Deposit issued by Royal Meridian International Bank (RMIB) that promised to pay guaranteed rates of return as high as 24%. Richmond, the complaint alleged, falsely claimed that RMIB was a fully chartered private offshore bank with offices in Canada, the Bahamas, Guernsey and Turks & Caicos when, the Division of Enforcement alleged, RMIB was a shell with no offices and no apparent significant sources of revenue from which it could pay returns except through the sale of additional fraudulent securities to unwitting investors. The Commission's complaint also alleged that investor funds were deposited into a series of money market and bank accounts controlled by Richmond and were used to repay other investors and for Richmond's and others' personal expenses.
A hearing will be scheduled before an administrative law judge to determine whether the allegations contained in the Order are true, to provide Richmond an opportunity to dispute these allegations, and to determine what sanctions, if any, are appropriate and in the public interest.