SECURITIES AND EXCHANGE COMMISSION v. CHARLES DWAIN DAVIS, JR., Civil Action No. 3:04-CV-1023-D (USDC/NDTX/Dallas Division)

On May 12, 2004 the SEC filed a civil action in the United States District Court for the Northern District of Texas against Charles Dwain Davis, Jr., a registered representative. According to the complaint, from July 1998 through July 2003 Davis misappropriated approximately $3 million that customers entrusted to him for the purchase of securities. The SEC alleges that Davis opened checking accounts in the name of various broker-dealers and clearing firms, then deposited customer's checks into those accounts for his own use. He prepared and sent to his customers periodic fictitious account statements showing the progress of the "investments" the customers thought they had made. Davis used money from other customers to cover customer requests for withdrawals from their non-existent accounts.

In its complaint, the SEC alleges that Davis violated 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. In its action, the SEC is seeking against Davis a permanent injunction, a civil penalty, disgorgement with prejudgment interest, and an accounting.

The SEC acknowledges the assistance of the U.S. Attorney's Office for the Northern District of Texas and the Texas State Securities Board.

SEC Complaint in this matter