UNITED STATES OF AMERICA
In the Matter of
|ORDER MAKING FINDINGS AND IMPOSING REMEDIAL SANCTIONS BY DEFAULT AGAINST KEVIN LYNDS AND GERALD J. STOCK|
The Securities and Exchange Commission (Commission) initiated this proceeding on January 3, 2003 with an Order Instituting Proceedings (OIP). On April 10, 2003, the Division of Enforcement (Division) filed a motion for default against all Respondents (Motion). Respondents Gerald J. Stock (Stock) and Kevin Lynds (Lynds) filed answers to the OIP on January 30, 2003.
During the prehearing conference held on April 2, 2003, Respondents Stock and Lynds affirmatively stated that they intended to default, rather than participate further in the administrative proceeding. Pursuant to Rule 155(a) of the Commissions Rules of Practice, 17 C.F.R. § 201.155(a), and the Respondents' affirmative representations, I find the following allegations set out in the OIP to be true as to Respondents Stock and Lynds:
From 1988 through 1991, Lynds was a registered representative associated with Avondale Securities Company. From 1992 through 1996, Lynds was a registered representative associated with A.G. Edwards & Sons, Inc. From 1996 through July 1999, Lynds was a registered representative associated with Donnelly & Co. From at least 1999 through at least March 2002, Lynds acted as an unregistered broker.
From 1993 through 1999, Stock was a registered representative associated with A.G. Edwards & Sons, Inc. During 1999, Stock was a registered representative associated with Cambridge Investment Research, Inc. Starting in 1999 through March 2002, Lynds acted as an unregistered broker.
On May 7, 2002, Lynds and Stock were permanently enjoined from violating Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 and Sections 10(b) and 15(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, by the United States District Court for the Northern District of Texas (Dallas Division), SEC v. Resource Development International, Inc., 3:02-CV-0605-R (SEC v. RDI).
The Commission's complaint in SEC v. RDI, filed on March 25, 2002, alleged that the defendants, from January 1999 through the initiation of the civil action, executed a prime bank scheme, operated chiefly through Resource Development International, Inc. (RDI), that raised over $98 million from over 1300 investors nationwide. The complaint further alleged that the defendants made false claims and material misrepresentations to investors concerning, among other things, the use of their money in Europe to trade financial instruments with the "top 50 World banks" in a program monitored by the Federal Reserve. The complaint further stated that the defendants falsely told investors that their monies would generate annual returns of 48 to 120 percent and that their principal was completely safe and could be retrieved at any time. The complaint charged that Lynds and Stock, in addition to participating directly in the offer and sale of the RDI program, induced investors to provide funds for a purportedly separate prime bank program operated through defendants Intercoastal Group, LLC, Intercoastal Group II, LLC, and Blackwolf Holdings, LLC; however, these funds were ultimately provided to RDI. The complaint alleged the prime bank programs marketed to investors did not exist and RDI did not send investor funds to Europe for use in a trading program. Rather, defendants misappropriated investment funds for personal and unauthorized uses, including making Ponzi payments to existing investors with funds provided by new investors. The complaint also alleged that Lynds and Stock, in the course of marketing the prime bank programs, acted as unregistered brokers.
On the basis of the foregoing, it is appropriate and in the public interest to impose the sanctions against Respondents Stock and Lynds as requested by the Division.
IT IS ORDERED, pursuant to Section 15(b)(6) of the Securities Exchange Act of 1934, that GERALD J. STOCK be, and he hereby is, BARRED from association with any broker or dealer; and
IT IS FURTHER ORDERED, pursuant to Section 15(b)(6) of the Securities Exchange Act of 1934, that KEVIN LYNDS be, and he hereby is, BARRED from association with any broker or dealer.
Lillian A. McEwen
Administrative Law Judge
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