U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19702 / May 17, 2006
SEC v. Carlos H. Soto, et al., Case No. 04-1105 (JP)
Final Judgment Entered Against Carlos Soto
The United States Securities and Exchange Commission announced that on March 20, 2006, the Honorable Jaime Pieras, Jr., United States District Judge for the District of Puerto Rico entered a Final Judgment against Carlos H. Soto ("Soto") a former Morgan Stanley DW, Inc. registered representative. The Final Judgment entered with Soto's consent, without admitting or denying the allegations of the SEC's complaint, enjoins him from violations of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The Final Judgment does not order Soto to pay disgorgement or a civil penalty based upon his sworn representations in his Statement of Financial Condition and other documents submitted to the Commission and Soto's agreement to forfeit $51 million and all assets with a value of more than $1,000 as provided in his Plea and Forfeiture Agreement in United States v. Soto, Criminal Case No. 04-127 (CCC), United States Court for the District of Puerto Rico.
The SEC commenced this action by filing its complaint on February 11, 2004, alleging that Soto, while employed at Morgan Stanley, raised at least $50 million by telling investors he would invest their funds in low risk mortgage-backed securities issued by the Government National Mortgage Association (commonly-called "Ginnie Maes"), but instead diverted the investors' money to accounts in the names of false companies he controlled. The complaint further alleged that Soto used the funds for personal use and to engage in speculative and risky trading, including short sales.