U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19758 / July 11, 2006
Richard W. Deboe, Civil Action No. 05 CV 2522 (S.D.N.Y.) (AKH) (filed March 3, 2005)
Court Enters Final Judgment Against Former Broker Richard W. Deboe for Securities Fraud and SEC Bars Him From the Securities Industry
On June 26, 2006, the U.S. District Court for the Southern District of New York entered a final judgment against Richard W. DeBoe ("DeBoe"). The Commission alleged in its complaint, filed previously on March 3, 2005, that DeBoe, while employed as a registered representative at Deutsche Banc Alex Brown ("Deutsche Banc," now Deutsche Bank Securities, Inc.) engaged in fraudulent conduct in customer accounts and aided and abetted the fraudulent conduct in these same accounts by Peter N. Brant, a convicted felon and SEC recidivist. According to the complaint, DeBoe, a former colleague and social friend of Brant, knew of Brant's conviction for felony securities fraud. The complaint alleges that DeBoe opened four new accounts at Deutsche Banc for customers referred to him by Brant. The complaint further alleges that each of the customers gave Brant trading authority and agreed to pay Brant fees for his investment advice. According to the complaint, Brant's role as investment adviser and his acceptance of fees for these services violated his bar from the securities industry, which was known by DeBoe or he was reckless in not knowing.
Finally, the complaint alleges that once the accounts were opened, DeBoe gave free rein to Brant over the accounts, participated with Brant in churning the accounts, violated explicit instructions from customers, and allowed Brant to misappropriate funds from DeBoe's customer accounts for Brant's own use. This fraudulent conduct generated commissions for DeBoe, who before opening these accounts referred by Brant, had been a "low" producer who earned relatively low commission income.
Without admitting or denying the allegations of the complaint, DeBoe consented to a final judgment, which permanently enjoins him 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 from aiding and abetting violations of Sections 206(1) and (2) of the Investment Advisers Act of 1940. The Court also ordered DeBoe to pay disgorgement of $15,032.44 and prejudgment interest of $9,485.03, but waived all but $1,000 based upon his Sworn Statement of Financial Condition and other documents.
On July 10, 2006, based on the entry of the Court's injunction, the Commission also instituted settled administrative proceedings against DeBoe. Without admitting or denying the Commission's findings, DeBoe consented to the entry of the Commission's Order, which bars him from associating with any broker, dealer, or investment adviser. In the Matter of Richard W. DeBoe, Administrative Proceeding File No. 3-12361; Securities Exchange Act of 1934 Release No. 54114 (July 10, 2006); Investment Advisers Act of 1940 Release No. 2532 (July 10, 2006). See also Litigation Release No. 19113.
Administrative Proceeding No. 34-54114