U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20117 / May 15, 2007
SEC v. Michael W. Crow, Duncan Capital LLC, Duncan Capital Group LLC, Robert David Fuchs, and Robert MacGregor, 07-Civ-3814 (CM)(S.D.N.Y.)
SEC Charges Michael W. Crow, an Undisclosed Control Person of a Registered Broker-Dealer, and Others With Violating the Broker-Dealer Registration and Reporting Requirements
On May 15, 2007, the Commission filed a civil injunctive action in United States District Court for the Southern District of New York charging Michael W. Crow, Duncan Capital LLC, Duncan Capital Group LLC ("DC Group"), Robert David Fuchs, and Robert MacGregor with violations of the broker-dealer registration and reporting requirements.
The Commission's complaint alleges that, from November 2003 through at least December 2004, defendant Crow, who had been previously enjoined by the United States District Court for the Southern District of California from future violations of the anti-fraud provisions of the federal securities laws and sanctioned by the Commission, acted as an unregistered principal of defendant Duncan Capital, a registered broker-dealer. The complaint alleges that Crow controlled virtually every significant aspect of Duncan Capital's operations and received the vast majority of the firm's profits. Yet Duncan Capital's regulatory filings failed to identify Crow as an officer, director or "control affiliate" of the firm, and falsely stated that: (1) no court had ever enjoined any of Duncan Capital's control affiliates in connection with an investment-related activity; and (2) the Commission had never entered an order against any of the firm's control affiliates in connection with an investment-related activity.
The Commission's complaint also alleges that defendant Fuchs, the owner and nominal president of defendant Duncan Capital and the person who filed the false regulatory filings on behalf of Duncan Capital, acquiesced in Crow's undisclosed control of Duncan Capital and helped facilitate it by, among other things, transferring Duncan Capital's profits to other entities Crow controlled.
The complaint further alleges that, with the knowledge and substantial assistance of Fuchs, defendant Duncan Capital also failed to register several associated persons, including Crow and defendant MacGregor, Duncan Capital's senior managing director in charge of private placements.
The Commission's complaint alleges that by engaging in this conduct, the defendants violated the broker dealer registration and reporting requirements of the federal securities laws. Specifically, the complaint alleges that: (1) Duncan Capital violated Sections 15(b)(1), 15(b)(7) and 17(a) of the Securities Exchange Act of 1934 ("Exchange Act") and Rules 15b3-1, 15b7-1 and 17a-3(a)(12) thereunder; (2) Crow violated Section 15(a) of the Exchange Act and aided and abetted Duncan Capital's violations of Section 15(b)(1) of the Exchange Act and Rule 15b3-1; (3) MacGregor and DC Group violated Section 15(a) of the Exchange Act; and (4) Fuchs aided and abetted Crow, MacGregor and DC Group's violations of Section 15(a) of the Exchange Act and Duncan Capital's violations of Sections 15(b)(1), 15(b)(7) and 17(a) of the Exchange Act and Rules 15b3-1, 15b7-1 and 17a-3(a)(12) thereunder.
In its enforcement action the Commission seeks permanent injunctions against Crow, Fuchs, MacGregor, Duncan Capital and DC Group from future violations of the foregoing securities laws, the disgorgement of all ill-gotten gains and civil penalties. The Commission also named the following individual and entities as relief defendants and seeks disgorgement from them: Trevor Crow, Santal Holdings LLC, M.W. Crow Family LP, Crow 2001 Children's Trust FBO Michelle Lee Crow, Crow 2001 Children's Trust FBO Spencer Michael Crow, Crow 2001 Children's Trust FBO Duncan Crow, and Crow 2001 Children's Trust FBO Olivia Trevor Crow.