SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 16832 / December 18, 2000
SECURITIES AND EXCHANGE COMMISSION V. ROBERT N. YOUNG, 00 CV 1039 (WMS)(W.D.N.Y.)
The Securities and Exchange Commission announced today that, on December 18, 2000, it filed a Complaint in the United States District Court for the Western District of New York charging Robert N. Young ("Young"), a former registered investment adviser and registered representative at various broker-dealers, with perpetrating an offering fraud on investors in Academy Circle Incorporated ("ACI"), a corporation that Young formed to buy and develop real estate in Kenmore, New York. The Complaint alleges that Young fraudulently induced or caused eleven of his advisory clients and brokerage customers to purchase approximately $1.5 million in promissory notes of ACI. The Complaint further alleges that, after ACI failed to develop its real estate holdings or otherwise yield a return for its investors, Young failed to refund any invested funds and filed for bankruptcy. Without admitting or denying the allegations in the Complaint, Young has consented to the entry of a final judgment enjoining him from future violations of the antifraud provisions of the federal securities laws and other relief.
Named in the Complaint is:
Robert N. Young ("Young"), a 54 year-old former resident of Williamsville, New York. Young was a registered investment adviser from March 1989 until January 2000, a registered representative at various broker-dealers from December 1977 to September 1995 and from November 1995 to July 1996, and an insurance salesman from 1977 to March 1996. During the time period when Young sold ACI notes, he conducted his investment advisory business through his company, Robert N. Young and Associates.
The Complaint alleges that:
Between approximately February 1994 and November 1996 when soliciting purchases of ACI notes, Young made material misrepresentations and omissions about the expected returns of ACI notes, the use of ACI investor proceeds, the risks of investing in ACI, the suitability of ACI notes for his clients and customers, and his control over ACI. Young also effected unauthorized trades in the accounts of four of his advisory clients and, without discretion over those accounts or his advisory clients' authorization, sold securities from the accounts and purchased ACI notes with the proceeds. In addition, in November 1996, Young willfully omitted from an investment adviser registration form, or Form ADV, that he filed with the Commission that he was recommending to clients that they buy or sell securities or investment products in which Young had a financial interest.
The Commission alleges that Young engaged in securities fraud in violation of Section 17(a) of the Securities Act of 1933 ("Securities Act"), 15 U.S.C. § 77q(a), Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act"), 15 U.S.C. § 78j(b), Rule 10b-5 thereunder, 17 C.F.R. § 240.10b-5, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940 ("Advisers Act"), 15 U.S.C. §§ 80b-6(1) and 80b-6(2). The Commission also alleges that Young willfully violated Section 207 of the Advisers Act, 15 U.S.C. § 80b-7. In his consent, Young has agreed to the entry of a final judgment (1) enjoining him from future violations of the above-referenced provisions; and (2) ordering him to disgorge $1.5 million but waiving payment of that amount and prejudgment interest, and not ordering him to pay a civil penalty pursuant to Section 20(d) of the Securities Act, 15 U.S.C. § 77t(d), Section 21(d)(3) of the Exchange Act, 15 U.S.C. § 78u(d)(3), and Section 209(e)(1) of the Advisers Act, 15 U.S.C. § 80b-9(e)(1), based on Young's demonstrated inability to pay as represented in his sworn financial statements.
The Commission acknowledges the assistance of the New York State Attorney General's Office in this matter.