U.S. Securities and Exchange Commission
Litigation Release No. 18150 / May 20, 2003
Securities and Exchange Commission v. David M. Mobley, Sr. et al. (Civil Action No. 00 Civ. 1316, Southern District of New York) (Casey, J.)
SEC Settles With Convicted Hedge Fund Operator David Mobley,
Bars Him From The Investment Advisory Business
Today the Securities and Exchange Commission announced a settlement with David M. Mobley, Sr., age 47, the hedge fund adviser it charged with defrauding investors of $59 million for a seven-year period during the 1990s, and with diverting investor funds to pay for his luxurious lifestyle. Subject to the approval of the U.S. district court hearing the Commission's civil action against Mobley, the settlement would enjoin Mobley from violating the antifraud provisions of the federal securities laws. Separately, the Commission would bar Mobley from the investment advisory business.
The Commission filed its civil action against Mobley in February 2000 and obtained an emergency asset freeze and preliminary injunction. In addition, the court appointed a receiver to take possession of Mobley's and his hedge funds' assets, to search for hidden assets, and to redistribute funds to defrauded investors. In July 2001, in a related action brought by the U.S. Attorney's Office for the Middle District of Florida, Mobley pleaded guilty to eight felony counts for his fraudulent scheme, was sentenced to seventeen and a half years' imprisonment, and was ordered to pay $76.2 million in restitution. Mobley is currently in prison.
In the settlement announced today, Mobley consented, without admitting or denying the Commission's allegations, to the entry of a final judgment that (1) permanently enjoins him from violating Section 17(a) of the Securities Act of 1933; Section 10(b) of the Securities Exchange Act of 1934 and Exchange Act Rule 10b-5; and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940, and (2) orders him to disgorge $38.96 million, with that obligation deemed satisfied by Mobley's previous disgorgement of that amount of funds and other assets to the receiver. Also today, with Mobley's consent, the Commission issued an order barring him from being associated with any investment adviser, pursuant to Section 203(f) of the Investment Advisers Act of 1940.
The Commission thanks the Commodity Futures Trading Commission for its assistance in this case.