U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19189 / April 18, 2005
SEC v. David Faubert and Faubert Financial Group, Inc., (United States District Court for the District of Connecticut, C.A. No. 3:05-CV-510 (MRK), filed March 23, 2005)
COURT ORDERS PRELIMINARY INJUNCTION AGAINST DAVID M. FAUBERT AND HIS FINANCIAL SERVICES FIRM
The Securities and Exchange Commission announced that, on April 8, 2005, U.S. District Judge Mark R. Kravitz entered a preliminary injunction against David M. Faubert, formerly a registered representative with Tower Square Securities, Inc., and his financial services business, Faubert Financial Group, Inc. of Avon, Connecticut, thereby extending an asset freeze the Court had previously entered on March 24, 2005.
As the Commission set forth in its Complaint, Faubert, of Simsbury, Connecticut, defrauded Faubert Financial Group clients of approximately $2.4 million by falsely telling them that their money was invested in a "fixed account" that guaranteed an 8% return when, in fact, Faubert was diverting funds for his personal use, including for the payment of gambling debts. According to the Complaint, on March 14, 2005, representatives of the Securities and Business Investments Division of the Connecticut Department of Banking began an examination of Faubert's activities based on a client complaint. On March 22, 2005, shortly after the Connecticut authorities demanded that Faubert produce certain records, Faubert admitted to having defrauded his clients. In its Complaint, the SEC charges that, to conceal the fraud, Faubert provided his clients with fabricated account statements.
The Court's April 8, 2005 Order preliminarily enjoins the defendants from violating Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and Sections 206(1) and (2) of the Investment Advisers Act of 1940. Among the relief the SEC is continuing to seek in its action are disgorgement of the defendant's ill-gotten gains, civil penalties and a permanent injunction.
For further information, see Litigation Release No. 19166.