U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19748 / June 29, 2006
Securities and Exchange Commission v. Wendy Feldman Purner, Civil Action No. 06-CV-01148 (D.D.C. filed June 23, 2006)
Court Enters Final Judgment Against Wendy Purner
SEC Bars Purner from the Securities Industry
On June 27, 2006, the Honorable Paul L. Friedman of the United States District Court for the District of Columbia entered a final judgment against Wendy Feldman Purner, a former registered representative, based upon charges of fraud relating to her alleged misappropriation of $4,145,000 from her brokerage customers and investment adviser clients. Purner consented, without admitting or denying the allegations in the complaint, to the entry of the final judgment imposing a permanent injunction and ordering disgorgement of $4,145,000.
The Commission filed a complaint on June 23, 2006, alleging that during the period from July 1998 through late 2001, Purner breached the trust of her brokerage customers and investment advisory clients and engaged in fraud when she misappropriated $4,145,000 from their accounts. While associated with a registered broker-dealer and investment adviser and later at her own investment advisory firm, Purner received money from her customers and clients to invest and manage. The Commission alleged in its complaint that Purner told her customers and clients that she would invest their money in various investment vehicles, including commercial paper, investment partnerships, and common stock. The complaint alleged that Purner did not, however, invest her customers' and clients' money but rather misappropriated it or used it to conceal her withdrawals from the accounts of other customers and clients. According to the complaint, Purner concealed her fraud at the registered broker-dealer and investment adviser by creating and mailing, to her customers, false account statements that described non-existent investments and contained inflated account balances. The complaint further alleged that while at her own investment advisory firm, Purner hid her fraud from her clients by making materially false oral representations to her clients regarding the nature and value of their investments.
In September 2004, Purner pled guilty to three counts of wire fraud in the United States District Court for the Southern District of California for the same conduct alleged in the complaint and agreed to pay restitution totaling $4,145,000 to her defrauded customers and clients. Purner is scheduled to be sentenced on November 27, 2006, and faces a period of incarceration of up to fifteen years.
Without admitting or denying the allegations in the Commission's complaint, Purner consented to the entry of the final judgment which permanently enjoins her from violating Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. In addition to the injunctive relief, Purner agreed to pay $4,145,000 in disgorgement which will be deemed satisfied by the anticipated order of restitution in the criminal proceeding. In the event that no order of restitution is entered in the criminal proceeding, the final judgment requires Purner to pay the entire amount of disgorgement of $4,145,000 to the Commission following the final disposition of the criminal proceeding.
On June 29, 2006, based on the entry of the Court's injunction, the Commission also instituted settled administrative proceedings against Purner. Without admitting or denying the Commission's findings, Purner consented to the entry of the Commission's Order, which bars her from associating with any broker, dealer, or investment adviser. In the Matter of Wendy Feldman Purner, Administrative Proceeding File No.3-12348; Securities Exchange Act of 1934 Release No.54068 (June 29, 2006); Investment Advisers Act of 1940 Release No. 2527 (June 29, 2006).
The Commission acknowledges the assistance in its investigation of the United States Attorney's Office for the Southern District of California.