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U.S. Securities and Exchange Commission


Litigation Release No. 17266 / December 12, 2001

United States v. Alan Bond, 01-CR-1140 (S.D.N.Y.)

On December 7, 2001, the United States Attorney's Office for the Southern District of New York (USAO) indicted Alan Bond (Bond), charging him with investment advisory fraud, mail fraud, and false statements on Forms ADV. The indictment is based on allegations that Bond, through his money management firm, Albriond Capital Management, LLC (Albriond), defrauded clients through an unlawful trade allocation scheme. Bond had previously been indicted by the USAO and sued by the Securities and Exchange Commission (Commission) in December 1999 on a different scheme in which he allegedly received millions of dollars in brokerage commission kickbacks.

The new indictment alleges that from approximately March 2000 to July 2001, while trading for his own personal account and the accounts of three institutional clients, Bond allocated the vast majority of profitable trades to his own personal account, while allocating the vast majority of unprofitable trades to client accounts. According to the indictment, Bond directed approximately 2,293 separate purchases of securities, of which 1,168 were profitable, and 1,125 were unprofitable, at the close of the trading day on which they were purchased. Bond allegedly allocated more than 93% of these profitable trades to his own account, but less than seven percent of the profitable trades to client accounts. Further, Bond allegedly allocated less than 17% of the unprofitable trades to his own account, but more than 83% of the unprofitable trades to client accounts. Consequently, during this 17-month period, Bond's clients allegedly lost nearly $57 million, representing investment losses ranging from 64% to 73%. In contrast, during the same period, Bond allegedly personally gained approximately $6.6 million, representing an investment return of approximately 5,487%.

In August 2001, based on the same allegations in the USAO's indictment, the Commission obtained an order temporarily restraining Bond and Albriond from violating the antifraud provisions of the securities laws and freezing their assets with an allowance for reasonable living expenses and attorneys fees. In October 2001, the Commission obtained an order preliminarily enjoining Bond and Albriond from violating the antifraud provisions of the securities laws and continuing the asset freeze, subject to certain provisions. The Commission is seeking permanent injunctions and civil money penalties against Bond and Albriond, and disgorgement from Bond. The Commission's case against Bond and Albriond is stayed pending resolution of the criminal case. [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.)]

For additional information, see Litigation Release Nos. 17099 (August 10, 2001) and 16394 (December 16, 1999).


Modified: 12/12/2001