GEL Direct LLC, GEL Direct Trust, Jeffrey K. Galvani, and Stuart A. Jeffery

U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 26092 / August 30 , 2024

Securities and Exchange Commission v. GEL Direct Trust, GEL Direct, LLC, Jeffrey K. Galvani, and Stuart A. Jeffery, No. 1:22-cv-09803 (S.D.N.Y. filed Nov. 17, 2022)

SEC Obtains Final Judgments Against Unregistered Brokers That Facilitated More Than $1.2 Billion In Primarily Penny Stock Trades

On August 27, 2024, the U.S. District Court for the Southern District of New York entered final judgments against GEL Direct LLC, GEL Direct Trust, Jeffrey K. Galvani, and Stuart A. Jeffery, whom the SEC previously charged for operating as unregistered brokers.

According to the SEC’s complaint, filed on November 17, 2022, from 2019 through at least May 2022, Galvani and Jeffery, acting through the GEL entities, provided brokerage services to approximately 60 customers involving at least 19,000 securities trades, primarily in penny stocks. According to the complaint, the brokerage services that the GEL entities provided included taking possession of customer securities, directing trades to executing brokers, facilitating trade settlements, and disbursing trading proceeds to customers. The SEC also alleged that, in return for these services, the defendants received transaction-based and other compensation from their customers.

Without admitting or denying the SEC’s allegations, the defendants consented to the entry of the final judgments, which enjoin the defendants from future violations of the broker-registration requirements of Section 15(a) of the Securities Exchange Act of 1934, bar the GEL entities from participating in any offerings of a penny stock, and impose civil penalties of $750,000 against GEL Direct LLC and $98,000 each against Galvani and Jeffery.

The SEC’s litigation was conducted by Keefe Bernstein, Catherine Rowsey, and Jaime Marinaro of the SEC’s Fort Worth Regional Office, and was supervised by Derek Kleinmann and B. David Fraser.