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U.S. Securities and Exchange Commission

U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 22706 / May 23, 2013

Securities and Exchange Commission v. Blake Richards, Civil Action No. 1:13-CV-1729 (N.D. Ga.)

SEC Charges Atlanta-Area Registered Representative and Registered Investment Adviser Representative with Securities Fraud

On May 23, the Securities and Exchange Commission filed an emergency action seeking a temporary restraining order and other emergency relief in federal court in the Northern District of Georgia, charging Blake Richards (Richards), a Buford, Georgia resident with violations of the federal securities laws for misappropriating investor funds.

The Honorable Julie E. Carnes, the Chief Judge of the Northern District of Georgia, granted the Commission’s request for emergency relief, issuing an order that temporarily restrained Richards from further securities laws violations, froze Richards’s assets, prevented the destruction of documents and expedited discovery. The Court also set a hearing date of June 6 for the Commission’s request for a preliminary injunction. The Commission’s complaint also seeks a permanent injunction, disgorgement of ill-gotten gains with prejudgment interest, and civil penalties. Those claims will be adjudicated at a later date.

The Commission’s complaint alleges that, since at least 2008, Richards, a registered representative of a broker dealer, misappropriated at least $2 million from at least seven investors. The majority of the misappropriated funds constituted retirement savings and/or life insurance proceeds from deceased spouses.

In its complaint, the Commission alleges that Richards instructed investors to write out checks to entities under his control with the understanding that Richards would invest their funds in fixed income assets, variable annuities and/or common stock. The complaint alleges that none of these investments were ever made. None of the investments appeared on the client’s brokerage account statements, and Richards received no commission income from these investments. The complaint further alleges that Richards siphoned off the funds entrusted to him for personal use.

The complaint alleges that Richards violated the antifraud provisions of the federal securities laws, Section 17(a) of the Securities Act of 1933 (“Securities Act”), Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 10b-5 thereunder. The complaint also alleges that Richards violated Sections 206 (1) and Section 206 (2) of the Investment Advisers Act of 1940 (“Advisers Act”), the antifraud provisions of the Advisers Act.

SEC Complaint

 

http://www.sec.gov/litigation/litreleases/2013/lr22706.htm


Modified: 05/23/2013