SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 17363 / February 15, 2002
Securities and Exchange Commission v. Saint James Asset Management, Inc. and John Raymond Linney Clain, Defendants and Clain Family Corporation, Relief Defendant, Civil Action Number 1:02-CV-426 (N.D. Ga.)
SEC CHARGES A GEORGIA INVESTMENT ADVISER AND ITS CONTROLLING SHAREHOLDER WITH FRAUD.
The Securities and Exchange Commission announced today that it has filed a complaint in the United States District Court for the Northern District of Georgia against John Raymond Linney Clain and his investment adviser firm, Saint James Asset Management, Inc., both of Alpharetta, Georgia. The complaint alleges that between 1998 and 2000, Clain and Saint James misappropriated approximately $920,000 from sixteen clients. The complaint also names Clain Family Corporation, a Georgia company, as a relief defendant.
The complaint alleges that Clain and Saint James obtained over $960,000 from sixteen clients between January 1998 and October 2000 by misrepresenting that the clients' money would be used to purchase various securities. Without the clients' knowledge or permission, Clain used the money primarily to fund the operations for an Augusta, Georgia company in which Clain had an interest, Alternate Energy Resources, Inc. The complaint also alleges that Clain used misappropriated funds to purchase two cars and a diamond ring, and to pay the mortgage on his house. Clain Family Corporation, which is controlled by Clain, now owns one of the cars. It also alleges that the defendants' misconduct included providing clients with materially false and misleading periodic account statements that represented falsely that they had bought specific securities for the clients, when in fact they had.
The SEC's complaint charges Clain and Saint James with violations of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder. The complaint also charges Clain and Saint James with violations of Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. The SEC seeks permanent injunctions against Clain and Saint James as well as an order compelling disgorgement of ill-gotten gains, along with prejudgment interest and civil penalties. The complaint seeks return of ill-gotten gains from Clain Family Corporation, the relief defendant.