UNITED STATES OF AMERICA
In the Matter of
|ORDER MAKING FINDINGS AND IMPOSING REMEDIAL SANCTIONS BY DEFAULT AGAINST DAVID EDWARDS AND JAMES EDWARDS|
The Securities and Exchange Commission (Commission) initiated this proceeding on January 3, 2003, with an Order Instituting Proceedings (OIP). Respondents David Edwards and James Edwards filed answers to the OIP on January 30, 2003. On April 10, 2003, the Division of Enforcement (Division) filed a motion for default against all Respondents. I issued default orders as to Respondents Gerald J. Stock and Kevin Lynds on April 15, 2003. On April 15, 2003, I ordered David Edwards and James Edwards to show cause, on or by Friday, April 25, 2003, why they should not be held in default and why they should not be barred from association with any broker or dealer.
David Edwards and James Edwards have failed to show cause why they should not be held in default. Pursuant to Rules 155(a) and 221(f) of the Commissions Rules of Practice, 17 C.F.R. §§ 201.155(a), .221(f), I find the following allegations in the OIP to be true only as to David Edwards and James Edwards:
From 1991 through 1998, David Edwards was licensed as a registered representative with First Associated Securities Group, Inc. (FASG). From 1993 through 1998, David Edwards was associated with FASG as a general principal. From at least 1999 through at least March 2002, David Edwards acted as an unregistered broker.
From 1984 through 1998, James Edwards was licensed, at various times, as a registered representative with the following brokers-dealers: Monarch Securities, Inc., Amev Investors, Inc., FASG, Intersecurities, Inc., and Russian River Financial Services, Inc. From at least 1999 through at least March 2002, James Edwards acted as an unregistered broker.
On May 7, 2002, David Edwards and James Edwards 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. Res. Dev. Int'l, 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 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, the 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 David Edwards and James Edwards, 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 David Edwards and James Edwards as requested by the Division.
IT IS ORDERED, pursuant to Section 15(b)(6) of the Securities Exchange Act of 1934, that DAVID EDWARDS 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 JAMES EDWARDS be, and he hereby is, BARRED from association with any broker or dealer.
Lillian A. McEwen
Administrative Law Judge
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