SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 17761 / October 1, 2002
Securities and Exchange Commission v. Quest Capital Strategies, Inc. and David Chen Yu, Civil Action No. CV-02-01512 (D.D.C.) (PLF)
PRELIMINARY INJUNCTION ENTERED AGAINST DAVID CHEN YU AND QUEST CAPITAL STRATEGIES, INC. FOR VIOLATION OF COMMISSION-ORDERED SUPERVISORY BAR
On September 25, 2002, Judge Paul L. Friedman of the United States District Court for the District of Columbia issued an Order of Preliminary Injunction against David Chen Yu and Quest Capital Strategies, Inc. (the "Preliminary Injunction"). The Preliminary Injunction arose out of Yu's alleged violation of a supervisory bar the Commission imposed on him last October, Quest Capital Strategies, Inc. and David Chen Yu, Exchange Act Release No. 44935 (October 15, 2001).
In a memorandum opinion issued the same day, Judge Friedman found that the Commission had made the required strong prima facie case that Yu had violated the supervisory bar by retaining a significant degree of supervisory control of Quest, a registered broker-dealer with which he is associated. The opinion cited evidence that Yu remained involved in decisions regarding hiring and firing of key personnel at the broker-dealer, including brokers and compliance personnel, and retained at least secondary responsibility for advising on the termination of brokers and the hiring and supervision of compliance personnel. Judge Friedman also found that Yu and Quest had violated Section 15(b)(6)(B) of the Securities Exchange Act of 1934 in that Yu had associated with a broker-dealer (Quest) in violation of a Commission bar and Quest had permitted him to do so although aware of the bar. Finally, the judge found that there was a reasonable likelihood that the violations would continue. The Preliminary Injunction enjoins Quest and Yu from future violations pending the outcome of the court action.
The court action was commenced on July 31, 2002 with the filing of a complaint and an application for a preliminary injunction. For more information about the Commission's complaint and the prior proceedings against Quest, Yu, and Nakoski, see SEC v. David Chen Yu and Quest Capital Strategies, Inc., Litigation Release No. 17644 (July 31, 2002 ); 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).