SEC V. THOMAS G. BROOKS, U.S. District Court for the District of Minnesota, Civil Action No. CV 03-3319 AJB (D. Minn.)
On December 23, 2003, the Honorable Arthur J. Boylan of the United States District Court for the District of Minnesota entered an order of permanent injunction against Thomas G. Brooks ("Brooks"). Brooks consented, without admitting or denying the allegations in the Complaint, to the entry of an order of permanent injunction enjoining him from violations of Section 17(a) of the Securities Act of 1933 and Sections 10(b), 15(c)(3) and 17(a) of the Securities Exchange Act of 1934 and Rules 10b-5, 15c3-3, 17a-3 and 17a-5 thereunder.
The Commission's complaint filed on June 3, 2003, alleges that from July 2001 through September 2001, Brooks, a resident of Eden Prairie, Minnesota, failed to collect millions of dollars in marks for stock loan transactions involving securities borrowed from Native Nations, Inc. and owed to MJK Clearing, Inc. ("MJK"), which was a subsidiary of Stockwalk, Inc. During this time period, the Complaint alleges that Brooks never disclosed MJK's true financial condition which resulted from his department's failure to collect the marks owed to MJK to any of the broker-dealers his department conducted business with, while knowing the broker-dealers relied on MJK's financial condition to decide how much business to transact with MJK.
The Commission further alleges that Brooks aided and abetted MJK's violations of the customer reserve requirements and record-keeping provisions during this same time period. According to the Complaint, Brooks falsified two stock loan reports which were used by MJK's accounting department to incorrectly compute MJK's customer reserve deposit. The false information was subsequently incorporated into MJK's FOCUS reports which Brooks subsequently provided to broker-dealers doing business with the SL Department.