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U.S. Securities and Exchange Commission

U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 19879 / October 24, 2006

SEC v. Regald B. Smith, Civil Action No. 7:00 CV 358 (E.D. Ky.) (Hood, J.)

The Securities and Exchange Commission ("Commission") announced that, on September 18, 2006, the Honorable Joseph M. Hood of the District Court for the Eastern District of Kentucky ordered former registered representative Regald B. Smith to pay disgorgement of $2,413,950.20 in connection with his scheme to defraud his brokerage customers out of funds through a fictitious bond scheme.

On September 6, 2000, the Commission filed a Complaint against Smith, who was in charge of the Pikeville, Kentucky office of Stifel, Nicolaus & Company, Inc. ("Stifel"), a registered broker-dealer. In its Complaint, the Commission alleged that, from about March 1999 to August 28, 2000, Smith raised over $5 million from his customers by telling them that he was going to invest in tax-exempt, high yield bonds. Instead of purchasing the bonds, Smith used investors' funds for his personal use. On September 7, 2000, Judge Hood entered an order of permanent injunction against Smith, enjoining him from violating Section 17(a) of the Securities Act of 1933, Section
10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder. Judge Hood also appointed a receiver who marshaled and liquidated Smith's assets.

In a related action against Smith by the United States Attorney's Office, on October 10, 2000, Smith pled guilty plea to one count of wire fraud. On February 12, 2001, Judge Hood sentenced Smith to 24 months in prison, followed by five years probation and ordered him to pay restitution of $4,759,319.00 plus prejudgment interest of $994,859.04 for a total of $5,750,181.70.

Based on the above, the Commission asked the Court to dismiss its claim against Smith for an additional civil penalty.

Additional materials:

  • Litigation Release 16911
  • Litigation Release 16698

 

http://www.sec.gov/litigation/litreleases/2006/lr19879.htm


Modified: 10/24/2006