U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21949 / April 27, 2011
SEC Created Fair Fund Returns Nearly $6 Million to Defrauded K.W. Brown Investors
Securities and Exchange Commission v. K.W. Brown and Company, et al., Civil Action No. 05-CV-80367-JOHNSON (S.D. Fla.)
The Securities and Exchange Commission announces that investors who were defrauded by the cherry-picking scheme involving K.W. Brown will receive nearly $6 million from the SEC created Fair Fund. Specifically, on April 22, 2011, the Court appointed distribution agent dispersed more than $5.88 million to defrauded investors. The distribution agent sent checks to more than a 1,000 investor accounts in 22 states and Canada. This multi-million dollar distribution means that defrauded investors will get back more than 60% of the funds they lost from the fraudulent cherry-picking scheme.
After a nine day bench trial in September 2007, the Magistrate Judge found Defendants K.W. Brown & Company, 21st Century Advisors, Inc., K.W. Brown Investments, Inc., Kenneth Brown, Wendy Brown and Michael Cimilluca, liable for violations of the anti-fraud and books and records provisions of the federal securities laws in connection with a fraudulent cherry-picking scheme and ordered them to pay disgorgement, prejudgment interest and civil money penalties. The Commission then collected millions of dollars from the Defendants and moved the Court to establish a Fair Fund and appoint a distribution agent to distribute these funds to defrauded investors. On January 29, 2009, the Court granted the Commission’s motion to establish a Fair Fund distribution fund in accordance with Section 308(a) of the Sarbanes-Oxley Act of 2002 and appointed a distribution agent to distribute the Fair Fund in a fair and equitable fashion.