U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23043 / July 11, 2014
Securities and Exchange Commission v. Robert G. Pearson and Illinois Stock Transfer Company (d/b/a/ ist Shareholder Services), Civil Action No. 1:14-cv-03875 (N.D. Ill.)
Court Enters Permanent Injunction Against Owner of Illinois-Based Transfer Agent
The Securities and Exchange Commission announced today that on July 9, 2014, the Honorable Rebecca R. Pallmeyer of the United States District Court for the Northern District of Illinois entered a judgment against defendant Robert G. Pearson in SEC v. Robert G. Pearson and Illinois Stock Transfer Company (d/b/a/ ist Shareholder Services), Civil Action No. 1:14-cv-03875 (N.D. Ill.). The Court entered the judgment, to which Pearson consented without admitting or denying the allegations in the Commission's Complaint. The judgment permanently enjoins Pearson from violating Sections 10(b) and 17A(d)(1) of the Securities Exchange Act of 1934 and Rules 10b-5(a) and 10b-5(c), 17Ad-12, 17Ad-13, 17Ad-16, and 17f-1 thereunder. The amount of disgorgement and civil penalties to be ordered of Pearson will be addressed in a future motion to be filed by the Commission.
According to the Complaint, ist Shareholder Services, a registered transfer agent with the Commission under the name of Illinois Stock Transfer Company ("IST"), and its owner, Robert G. Pearson, misappropriated more than $1.3 million belonging to their corporate clients and the clients' shareholders beginning in 2012. The defendants misused those funds in order to fund their own payroll and business obligations. Pearson admitted to the scheme during questioning by SEC examiners. The Commission's complaint also alleges that under Pearson's direction, IST committed multiple violations of the SEC's transfer agent rules, including the failure to safeguard funds and securities and to report lost and stolen securities. The firm also did not file an accurate annual study and evaluation of internal accounting controls, and failed to give notice of assumption and termination of transfer agent services. As a result, the Commission subsequently filed an ex parte emergency action and obtained a temporary restraining order, an asset freeze and the appointment of a receiver over the defendants in May 2014.
For additional information, please see Litigation Rel. No. 23007 (May 28, 2014).