In the Matter of Philip A. Pendergraft, et al.
Admin. Proc. File No. 3-16819
On September 17, 2015, the Commission instituted and simultaneously settled administrative and cease-and-desist proceedings (the “Order”) against four senior executives of Penson Financial Services, Inc. (“PFSI”) and/or its parent company Penson Worldwide, Inc. (“PWI”), Philip A. Pendergraft, Kevin W. McAleer, CPA, Thomas R. Johnson, and Charles W. Yancey (collectively, the “Respondents”). In the Order, the Commission found PFSI made approximately $100 million in failed margin loans to certain of its customers. PFSI made the bulk of these margin loans between 1999 and 2008 to Christopher J. Hall and his affiliates, including a company named Call Now, Inc. (“Call Now”), who invested in risky, unrated municipal bonds. Hall was the Chairman of Call Now’s board of directors, and in 2006 Call Now became a large shareholder of PFSI’s publicly traded parent company, PWI. PWI ultimately recorded more than $60 million in losses for these loans in 2011 and 2012. These losses and other disclosures about the loans beginning in 2011 contributed to a series of events resulting in PWI and PFSI’s bankruptcies in 2013. The Commission ordered, and the Respondents have paid, a total of $200,000.00 in civil money penalties to the Commission. The Commission ordered that such penalties will be held pending a decision whether the Commission, in its discretion, will seek to distribute the funds, pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002, as amended or transfer the funds to the U.S. Treasury. See the Commission’s Order: Release No. 33-9914.
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