U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21081 / June 12, 2009
Securities and Exchange Commission v. Aura Financial Services, Inc., Ronald E. Hardy, Jr., Peter C. Dunne, Qais R. Bhavnagari, Dipin Malla, Sandeep Singh, and Raymond Rapaglia, Civil Action No. 09-21592-CV-Moreno (S.D.Fl. June 11, 2009)
The Securities and Exchange Commission ("Commission") announced today that on June 11, 2009, it filed a Complaint in the United States District Court for the Southern District of Florida against Aura Financial Services, Inc. (Aura), an Alabama corporation headquartered in Birmingham, Alabama, and six of its current and former registered representatives, Ronald E. Hardy, Jr. (Hardy), Peter C. Dunne (Dunne), Qais R. Bhavnagari (Bhavnagari), Dipin Malla (Malla), Sandeep Singh (Singh), and Raymond Rapaglia (Rapaglia).
The Complaint alleges that, from approximately October 2005 through at least April 2009, the Defendants used fraudulent sales practices to induce customers to open and fund Aura brokerage accounts. The Complaint also alleges that the Defendants rampantly "churned" these accounts of at least fifteen customers by causing numerous trades to be executed which enriched Defendants through brokerage commissions and, in some cases, mark-ups, while depleting the customers' balances through trading losses and excessive transaction costs. In addition, the Complaint alleges that many of the trades effected by Defendants were unauthorized by the customers. The Complaint alleges that during 2008, Defendants' churning generated total gross commissions of over $1 million, while the accounts of the fifteen customers suffered a combined loss of over $3.5 million.
The Complaint alleges that the Defendants have violated the antifraud provisions of the federal securities laws, Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder. The Complaint seeks (1) preliminary injunctions against Aura and the four individual defendants still affiliated with it as registered representatives, Hardy, Bhavnagari, Malla, and Singh; (2) permanent injunctions against future violations; (3) disgorgement of ill-gotten gains with prejudgment interest; and (4) imposition of civil penalties.
The Commission worked closely in this matter with the Alabama Securities Commission (ASC), which simultaneously issued an Amended Order to Show Cause against Aura and three of its senior officers. The ASC Order alleges that the firm and named officers violated their supervision and compliance responsibilities under the Alabama securities laws.
The Commission additionally thanks the State of Florida Office of the Attorney General (Division of Economic Crimes) and the State of Wisconsin Department of Financial Institutions for their assistance in this matter.