U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21546 / June 3, 2010
Securities and Exchange Commission v. Aaron Donald Vallett and A.D. Vallett & Co. LLC, Case No. 3:10-CV-00551 (M.D.Tenn.)
SEC Charges Tennessee Investment Adviser with Securities Fraud
The Securities and Exchange Commission filed a civil injunctive action in Nashville, Tennessee on June 2, 2010 charging Aaron Donald Vallett, a registered representative in Brentwood, Tennessee operating through A.D. Vallett & Co., LLC, a state-registered investment adviser, with violations of the federal securities laws in connection with a trio of unregistered investment pools.
The Commission's complaint alleges that between September 2008 and April 2010, Vallett raised approximately $5.5 million from 19 investors while making misrepresentations to them about how the funds would be invested. While claiming that the investments were for investments in securities and real estate, Vallett in fact used some investor funds for personal expenses and paid off certain investors in his first offering with funds received to invest in one of his later offerings. Vallett also claimed that the investments were for notes to be secured with his personal assets and asset of entities that he owned. However, during a recent examination by Financial Institutions Regulatory Authority (FINRA), he provided false documentation suggesting that the collateral exceeded the amount raised.
In its Complaint, the Commission alleges that Vallett and Vallett & Co. violated Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. Also on June 2, the court issued an order temporarily restraining Vallett and Vallett & Co. from violating these provisions, freezing their assets, providing for expedited discovery, prohibiting the destruction of documents and directing that they provide an accounting for the funds received. A hearing on the Commission's request for a preliminary injunction will be held on a date yet to be determined.
The Commission wishes to acknowledge the assistance of FINRA's District 5 Office in New Orleans, Louisiana in this matter.
See Also: SEC Complaint