Securities and Exchange Commission
Litigation Release No. 17644 / July 31, 2002
SEC Sues David Chen Yu and Quest Capital Strategies, Inc. to Enforce a Commission-Ordered Supervisory Bar
Securities and Exchange Commission v. Quest Capital Strategies, Inc. and David Chen Yu, Civil Action No. 02 CV 1512 (D.D.C.)
The Securities and Exchange Commission announced today that it filed a complaint and application for a preliminary injunction in the U.S. District Court for the District of Columbia seeking to enforce a supervisory bar the Commission previously imposed on David Chen Yu. The Commission's complaint charges that Yu is continuing to act as a supervisor at Quest Capital Strategies, Inc. in violation of a supervisory bar imposed by the Commission in an Order Imposing Remedial Sanctions issued on October 15, 2001.
Named as defendants in the Commission's Complaint are:
The Commission Order arose from Quest's and Yu's failure to reasonably supervise John T. Nakoski, a Quest registered representative, with a view to preventing Nakoski's violations of the antifraud provisions of the securities laws. In the Opinion accompanying the Commission order, the Commission found that Quest and Yu had abdicated their supervisory responsibility, and characterized their failure to supervise Nakoski as "egregious" and Yu's attitude towards his supervisory responsibilities as "particularly disturbing." As a result, the Commission found that it was in the public interest that Yu be barred from associating with a broker-dealer in a supervisory capacity, provided that he may apply to become so associated after one year.
The Commission's Complaint charges that, despite the Commission Order, Yu continues to associate with Quest in a supervisory capacity by:
The Complaint seeks preliminary and permanent injunctions to stop Yu from violating the Commission Order and to stop Yu and Quest from violating Section 15(b)(6)(B) of the Securities Exchange Act of 1934. The Complaint also seeks civil penalties against Yu and Quest for their violations of the Exchange Act.
For more information on the prior proceedings against Quest, Yu, and Nakoski, see Quest Capital Strategies, Inc. and David Chen Yu, Release Nos. 34-44935 and 40-1990 (October 15, 2001), and SEC v. John T. Nakoski, Litigation Release No. 14515 (May 30, 1995).