SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 16638 / July 31, 2000
SEC SUES TALLAHASSEE BROKER-DEALER AND ITS PRESIDENT, ALLEGING THEFT OF CUSTOMER FUNDS
Securities and Exhange Commission v. Meridian Asset Management, Inc., et al, Civil Action No. 4:00CV278RH (N.D. Florida, Tallahassee Division)(complaint filed July 26, 2000)
On July 26, 2000, the Securities and Exchange Commission (SEC) filed a complaint and consent to permanent injunction in an action against a Tallahassee, Florida broker-dealer, Meridian Asset Management, Inc. (Meridian), and its president, Robin McEachin. According to the SEC's complaint, Meridian is a broker-dealer registered with the SEC, and an investment adviser registered with the State of Florida. Without admitting or denying the SEC's allegations, Meridian and McEachin consented to the entry of a permanent injunction against future violations of the antifraud provisions of the federal securities laws, an asset freeze, disgorgement of ill-gotten gains, a civil money penalty and other relief. Meridian also consented to the intervention in the case of the Securities Investor Protection Corporation (SIPC) and to the appointment of a SIPC trustee to liquidate Meridian for the benefit of its customers.
The SEC alleges in its complaint that from at least 1998 through the present, McEachin misappropriated at least $1 million, in large part pension funds, which his customers entrusted to him for investment on their behalf. To conceal his theft, McEachin created fictitious Meridian account statements reflecting the purported contents and market value of his customers' portfolios. The account statements falsely showed purchases of securities in the customers' accounts. In fact, McEachin had either purchased no securities, or had purchased significantly less than reflected in the account statements. The SEC also alleges in its complaint that Meridian failed to maintain the minimum net capital required by law, and that it failed, or is in danger of failing, to meet its obligations to its customers.
The SEC also named in its complaint as relief defendants two companies under McEachin's control, Benefit Plans Consultants, Inc. (BP Consultants) and Consolidated Capital Resources, Inc. (CC Resources), alleging that the companies received at least $120,000 of stolen customer funds. Both companies consented to an asset freeze and to the entry of an order requiring them to disgorge the customer funds which the SEC alleges they unjustly received.
The SEC alleges in its complaint that Meridian violated Sections 17(a)(1), 17(a)(2), and 17(a)(3) of the Securities Act of 1933 (Securities Act), Sections10(b) and 15(c)(3) of the Securities Exchange Act of 1934 (Exchange Act) and Rules 10b-5 and 15c3-1 thereunder, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940 (Advisers Act). The SEC further alleges in its complaint that McEachin violated Sections 17(a)(1), 17(a)(2) and 17(a)(3) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and that McEachin aided and abetted Meridian's violations of Section 15(c)(3) of the Exchange Act and Rule 15c3-1 thereunder, and Sections 206(1) and 206(2) of the Advisers Act.
The SEC would like to acknowledge the valuable assistance of the Florida Office of the Comptroller, Division of Securities, and of SIPC in this investigation.