U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 16943 / March 23, 2001
SECURITIES AND EXCHANGE COMMISSION v. BRETT L. BOUCHY AND RICHARD C. WHELAN, Case No. CIV-96-2629-PHX-SRB (D. Ariz.)
FEDERAL COURT FINDS 2 ARIZONA BROKERS LIABLE FOR SECURITIES FRAUD AND MANIPULATION AFTER 5-DAY COURT TRIAL
The Securities and Exchange Commission ("Commission") announced that on March 22, 2001, the United States District Court for the District of Arizona, issued a judgment against two Arizona brokers whom the Commission charged with committing securities fraud and market manipulation. The two defendant brokers are Brett L. Bouchy ("Bouchy"), 33, and Richard C. Whelan ("Whelan"), 36, both now residing in Florida. The Court's judgment permanently enjoins the defendants from future violations of the federal securities laws and assesses a $50,000 civil penalty against each of them.
The Commission's complaint alleged that Bouchy and Whelan: (1) received undisclosed side payments for their stock recommendations to their brokerage customers; (2) stole funds from one of their clients; (3) fraudulently sold this same client securities without disclosing that they (Bouchy and Whelan) owned the securities personally and that they would earn about a 200% profit from the transaction; and (4) used nominee accounts to profit from the false closing of a public securities offering.
The Complaint further alleged that Bouchy and Whelan failed to disclose material facts in connection with an initial public offering ("IPO") they ran through a brokerage firm they controlled, namely: (1) that the IPO securities would be placed in a nominee account; and (2) that the brokerage firm would restrict retail sales of the IPO securities by instituting a no net sales policy. The Complaint also alleged that the brokerage firm solicited aftermarket orders before the IPO itself took place.
The Commission's enforcement action sought permanent injunctions from future violations of the antifraud and antimanipulation provisions of the federal securities laws, disgorgement and civil penalties against Bouchy and Whelan for their violations of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rules 10b-5, 10b-6 and 10b-9 thereunder.