U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 17099 / August 10, 2001
Securities and Exchange Commission v. Alan Brian Bond, Robert I. Spruill and Albriond Capital Management, LLC, Civil Action No. 99 Civ. 12092 (RO) (S.D.N.Y.)
The Securities and Exchange Commission (Commission) announced today that it filed an enforcement action in federal court in New York City, to freeze the assets of money manager Alan Brian Bond (Bond), age 40, of Upper Montclair, New Jersey, and his firm Albriond Capital Management, LLC (Albriond). The Commission's action alleges that Bond orchestrated an egregious cherry-picking or trade allocation scheme that resulted in his clients losing nearly $57 million and Bond reaping an investment return of almost 5,500%. Bond, a former frequent guest on PBS's Wall Street Week With Louis Rukeyser and CNBC, had been indicted by criminal authorities and sued by the Commission in December 1999 on a different scheme in which he allegedly received millions of dollars in brokerage commission kickbacks.
In this action, the Commission alleges that beginning in March 2000, while trading for his own personal account and the accounts of three institutional clients, Bond "cherry-picked" the best trades for himself. As part of his scheme, Bond called in his trades, generally orders to buy securities, to a brokerage firm in the morning without designating whether the trade was for his own account or the accounts of his clients. If the securities purchased increased in price during the day, Bond generally sold the shares and gave the profit to his own account. If the securities declined in value, Bond generally placed the securities in the accounts of three of his clients. Specifically, from March 2000 to July 25, 2001, Bond placed 2,296 buy trades through a New York brokerage firm. Of those trades, 1,168 were profitable on the day of the trade. Bond allocated 93% of those profitable trades to his own account and the balance to his clients. Of the 1,128 unprofitable trades, Bond allocated only 17% to his own account and 83% to his clients. Consequently, during this 17-month period, Bond's clients lost nearly $57 million, suffering a negative rate of return ranging from 65% to 74%. In contrast, during the same period, Bond personally gained nearly $6.6 million on an initial investment of approximately $260,000, an astounding 5,487% return.
In light of Bond's recent withdrawals of hundreds of thousands of dollars in allegedly illegal trading profits, the Commission obtained an order temporarily restraining Bond and Albriond from violating the law and freezing their assets, with an allowance for reasonable living expenses and attorneys fees pending further hearing on the matter, scheduled for September 7, 2001. Based on the allegations described above, the Commission is seeking permanent injunctions and civil money penalties against Bond and Albriond, and disgorgement from Bond, for violations of Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder, and for violations of Sections 206(1), 206(2) and 207 of the Investment Advisers Act of 1940.
In a parallel criminal case, the United States Attorney's Office for the Southern District of New York has arrested Bond and seized certain assets, including the unearned portion of a $500,000 payment to Bond's attorneys.
The Commission acknowledges the valuable assistance of the United States Attorney's Office for the Southern District of New York and the Federal Bureau of Investigation in bringing this case.