U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21897 / March 23, 2011
Securities and Exchange Commission v. James J. Konaxis, 1:11-CV-10489 (District of Massachusetts, Complaint filed March 23, 2011)
SEC CHARGES MASSACHUSETTS BROKER WITH DEFRAUDING 9/11 WIDOW
The Securities and Exchange Commission announced that it filed a civil injunctive action today in Massachusetts federal court against James J. Konaxis, of Beverly, Massachusetts, formerly a registered representative of Massachusetts-based broker-dealer Sentinel Securities, Inc. The Commission charged that Konaxis defrauded a former customer who was left widowed by the September 11, 2001 terrorist attacks. Konaxis’s customer made her investments with funds she obtained through the September 11th Victim Compensation Fund.
According to the Commission’s complaint, Konaxis excessively traded his customer’s funds while knowingly or recklessly disregarding her interests. The Commission alleges that Konaxis earned approximately $550,000 over approximately two years in commissions on his customer’s accounts. During this period, the Commission alleges that the value of his customer’s accounts decreased from approximately $3.7 million to approximately $1.6 million, much of which was due to Konaxis’s investments and the resulting commissions paid to Konaxis.
In particular, the SEC’s complaint alleges that Konaxis violated 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.
Konaxis has consented to a partial judgment pursuant to which he will be enjoined from future violations of the antifraud provisions of the Securities Act and Exchange Act, and barred from participating in any offering of penny stock. The SEC also seeks disgorgement of ill-gotten gains plus pre-judgment interest, and the imposition of a civil monetary penalty against Konaxis, and Konaxis has agreed to leave these issues to the discretion of the court. The Commission will also institute separate administrative proceedings against Konaxis in which he has consented to be barred from association with any broker, dealer, investment adviser, municipal securities dealer, or transfer agent.
The SEC acknowledges and appreciates the assistance of the Massachusetts Securities Division, which today filed separate charges against Konaxis.