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U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 22701 / May 16, 2013

Securities and Exchange Commission v. Deer Hill Financial Group, LLC, et al., Civil Action No. 12-01317

Final Judgments Entered Against Connecticut-Based Investment Adviser and His Firm Charged with Fraud for Stealing Investor Funds

The Securities and Exchange Commission announced today that on May 16, 2013, the United States District Court for the District of Connecticut entered final judgments by consent in a previously filed enforcement action against Stephen B. Blankenship and his investment advisory firm, Deer Hill Financial Group, LLC. The judgments enjoin Blankenship and Deer Hill from future violations of the federal securities laws.

On September 13, 2012, the Commission filed an enforcement action charging Blankenship, then a resident of New Fairfield, Connecticut, and Deer Hill Financial Group, LLC, a Connecticut limited liability company under Blankenship’s control, with a scheme to defraud investors. The Commission’s Complaint alleged that, from at least 2002 through November 2011, Blankenship misappropriated at least $600,000 from at least 12 brokerage customers by falsely representing that he would invest their funds in securities through defendant Deer Hill. The Court’s judgment enjoins Blankenship and Deer Hill from future violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and Section 17(a) of the Securities Act of 1933. The judgment also enjoins the defendants from future violations of Sections 206(1) and 206(2) of the Investment Advisers Act of 1940 and Section 15(a) of the Exchange Act.

Based on the same misconduct, the U.S. Attorney’s Office for the District of Connecticut charged Blankenship with criminal violations. On December 5, 2012, the United States District Court for the District of Connecticut sentenced Blankenship to forty-one months imprisonment plus three years of supervised release and ordered him to pay a fine of $7,500 and restitution in the amount of $607,516.81, based on his earlier guilty plea to one count of Mail Fraud and one count of Securities Fraud.

On October 11, 2012, the Commission barred Blankenship from working in the securities industry. The bar was based on his guilty plea to the federal criminal charges. The Connecticut Department of Banking’s Securities Division also obtained, by consent, a revocation of Blankenship’s registration and has barred Blankenship and Deer Hill from operating in Connecticut.

For further information see Litigation Release No. 22479 (September 13, 2012)(SEC Charges Connecticut-Based Broker for Stealing Investor Funds); Exchange Act Release No. 68038 (October 11, 2012)( Commission bars Blankenship based on this guilty plea); and Litigation Release No. 22571 (December 14, 2012)(Blankenship sentenced in related criminal proceeding and ordered to pay restitution).

 

http://www.sec.gov/litigation/litreleases/2013/lr22701.htm


Modified: 05/16/2013