U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19606 / March 10, 2006
SEC v. BMA Ventures, Inc. and William Robert Kepler, Civil Action No. 06-3-06CV0427-P (N.D. Tex., filed March 9, 2006)
SEC SUES INVESTMENT ADVISER BMA VENTURES, INC. AND ITS PRESIDENT, WILLIAM R. KEPLER, ALLEGING $1.9 MILLION "SCALPING" SCHEME
On March 9, the Commission filed suit in the United States District Court for the Northern District of Texas against BMA Ventures, Inc., a registered investment adviser, and its president and owner, William Robert Kepler. According to the complaint, from January 2004 through March 2005, BMA Ventures and Kepler issued newsletters by bulk fax under names such as "OTC Premier," "Inside Wall St.," and "OTC Marquee" recommending that the recipients purchase the stock of 26 companies, virtually all of which were penny stocks. The complaint alleges that the newsletters were fraudulent because they did not reveal that BMA Ventures was secretly selling its stock in the same companies contrary to its recommendations, a practice known as "scalping." BMA Ventures and Kepler obtained approximately $1.9 million through this scheme. Finally, BMA improperly registered with the Commission as an investment adviser because it did not meet the conditions necessary for registration.
The Commission alleges that BMA Ventures and Kepler violated the anti-fraud provisions of the federal securities laws, specifically 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 and that BMA Ventures violated, and Kepler aided and abetted BMA's violation of, the investment-adviser registration provisions, specifically Section 203A of the Investment Advisers Act of 1940. The Commission is seeking permanent injunctions against BMA Ventures and Kepler along with penny-stock bars, disgorgement with prejudgment interest, and civil monetary penalties.