In the Matter of Signator Investors, Inc, et al. Admin. Proc. File No. 3-16753
Oct. 12, 2022
- In the Matter of Cory D. Williams
Admin Proc. File No. 3-16754
- SEC v. Colonial Tidewater Realty Income Partners, LLC, et al.
Case No: 15-cv-2401 (D. Md.)
On August 13, 2015, the Commission instituted and simultaneously settled administrative proceedings (the “Signator Order”) against Signator Investors, Inc. and Gregory J. Mitchell (collectively, the “Respondents”). In the Order, the Commission found that the Respondents failed reasonably to supervise James R. Glover and Cory D. Williams (“Williams”), former registered representatives and investment adviser representatives at Signator with a view of preventing and detecting Glover’s and William’s violations of the federal securities laws. While associated with Signator, from approximately May 1998 through May 2012, Glover conducted an offering fraud that defrauded approximately 125 Signator advisory clients and brokerage customers of approximately $13.5 million by soliciting them to invest in Colonial Tidewater Realty Income Partners, LLC (“CTRIP”), a security not approved for sale by Signator’s representatives. Glover made materially false and misleading statements regarding the financial health of CTRIP, the expected returns and risk of investing, and deceived investors by, among other things, creating the false impression that CTRIP was a Signator-approved investment. Glover and Williams met with investors to discuss investments in CTRIP in Signator’s offices and provided clients with reports generated from Signator computer systems that included false valuations of their CTRIP investments. Williams assisted Glover in managing Signator’s advisory client portfolios, including clients who invested in CTRIP. Williams also breached his fiduciary duty to his clients by failing to disclose to them that he had received undisclosed fees from CTRIP. Williams knew that a substantial number of his advisory client were investing in CTRIP, but he knew virtually nothing about this unregistered offering, except that it was not an investment sanctioned or approved by Signator. The Commission ordered Signator to pay a civil penalty of $450,000 and Mitchell to pay a civil penalty of $15,000 to the Commission. The Commission also created a fair fund, pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002, so the civil penalties paid, can be distributed to harmed investors (the “Fair Fund”), and further provides that the Fair Fund, may accept funds paid in a related or federal court action or administrative proceeding arising out of the same underlying facts. See the Commission’s Order: Release No. 34-75690.
Also, on August 13, 2015, the Commission instituted and simultaneously settled a related administrative and cease-and-desist proceedings against Williams for his violations of the federal securities laws described in the Signator Order. The Commission ordered Williams to pay $94,191 in disgorgement, $9,854 in prejudgment interest, and a $94,191 civil money penalty to the Commission. The Commission also created a fair fund, pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002, so the penalties paid, along with the disgorgement and interest paid, can be distributed to harmed investors, and further ordered for it to be distributed through the Fair Fund established in the Signator Order. See the Commission’s Order: Release No. 34-75691.
On August 13, 2015, the Commission also filed a related civil action (the “Civil Action”) in the District Court of Maryland against CTRIP, Glover and Sherman T. Hill (“Hill”). On August 20, 2015, the Court entered Final Judgments against CTRIP, Glover and Hill, ordering: CTRIP to pay $1,319,386 (disgorgement of $527,844, prejudgment interest of $66,542, and a civil penalty of $725,000); Glover to pay $1,354,105 (disgorgement of $839,128, prejudgment interest of $64,977, and a civil penalty of $450,000); and Hill to pay a civil penalty of $75,000.
The Commission has recovered a total of $534,735.15 from the Civil Action which, has been added to Fair Fund.
The Fair Fund consists of the $465,000 paid by Signator and Mitchell, together with the $534,735.15 recovered from the Civil Action for a total of $999,735.13. Any additional funds collected from the Civil Action or received from Williams will be added to the Fair Fund for distribution to investors. The Fair Fund has been deposited in an interest-bearing account at the United States Department of the Treasury’s Bureau of the Fiscal Service, and all interest accrued will be added to the Fair Fund.
On January 17, 2020, the Commission appointed Miller Kaplan Arase LLP as the Tax Administrator of the Fair Fund. See the Commission’s Order: Release No. 34-88005.
On December 31, 2020, the Commission published a notice of the proposed plan of distribution and opportunity for comment and simultaneously published the proposed plan of distribution (“Proposed Plan”). The Proposed Plan proposed Noel Gittens, a Commission employee, serve as the Fund Administrator to oversee the administration and distribution of the Fair Fund. The notice provided the public with 30 days to submit their comments on the Proposed Plan. See the Commission’s Notice: Release No.34-90836 and the Proposed Plan.
The Proposed Plan proposes that the distribution of the Fair Fund shall be made to those harmed investors identified by Commission staff during its investigation of the underlying securities violations in accordance with the methodology detailed therein.
On February 11, 2021, the Commission issued an order approving the Proposed Plan and simultaneously posted the approved plan of distribution (the “Plan”). See the Commission’s Order: Release No. 34-91111 and the Plan.
On April 16, 2021, the Commission issued an order directing the disbursement of $975,788.48 from the Fair Fund for distribution in accordance with the Plan. See the Commission’s Order: Release No. 34-91589.
For more information, please contact the Commission:
Office of Distributions