U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19841 / September 20, 2006
SEC v. Irving Paul David, 03 Civ. 6305 (S.D.N.Y.)(KMW)
SEC Case Against Former Investment Company Officer Settled
The Securities and Exchange Commission announced that on September 5, 2006, the Honorable Kimba M. Wood of the United States District Court for the Southern District of New York entered a final judgment upon consent against defendant Irving Paul David, the former controller of the Smith Barney World Funds.
The final judgment permanently enjoins David from future violations of Sections 34(b) and 37 of the Investment Company Act, and of Section 15(d) of the Exchange Act and permanently enjoins him from serving as an officer, director, member of any advisory board, investment advisor, or depositor of any registered investment company, or as principal underwriter of any open-end registered investment company. Based upon the restitution ordered against him in a parallel criminal case, no disgorgement was ordered, and no civil penalty was imposed, in the final judgment. David consented to the entry of the final judgment without admitting or denying the allegations in the Commission's complaint. On October 2003, a partial judgment had been entered against David, on his consent, that imposed the same injunctive relief but deferred resolution of the Commission's claims for monetary relief.
The Commission's complaint, filed on August 21, 2003, alleged that David, formerly an employee of Citigroup Global Markets, Inc., f/k/a Salomon Smith Barney, Inc. ("Citigroup Global Markets"), embezzled a total of approximately $47,529 from two affiliated registered investment companies: Consulting Group Capital Markets Funds (the "Consulting Group Fund"), and Smith Barney World Funds Inc. (the "Smith Barney World Fund") (collectively, the "Funds"), for which he served as treasurer and controller, respectively. In addition, at the same time that he was embezzling from the Funds, David signed a certification pursuant to the Sarbanes-Oxley Act of 2002 in which he falsely stated that he had disclosed to the Consulting Group Fund's auditors and audit committee any fraud, whether material or not, involving management, when in fact he had made no such disclosure.
On April 7, 2004, in the criminal case based on the same conduct that underlies the Commission's complaint, David pleaded guilty to one count of embezzlement from a registered investment company in violation of Sections 37 and 49 of the Investment Company Act, and one count of mail fraud. United States v. Irving David, 03 Crim. 1016 (S.D.N.Y.) (MBM). On September 8, 2005, David was sentenced to one year of supervised release and ordered to pay $14,528 in restitution.
See also Litigation Release No. 18300 (Aug. 21, 2003).