U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20809 / November 14, 2008
Securities and Exchange Commission v. Michael W. Crow, et al., Civil Action No. 07 CV 3814 (S.D.N.Y.)
SEC PREVAILS IN TRIAL AGAINST MICHAEL W. CROW FOR UNLAWFULLY CONTROLLING REGISTERED BROKER-DEALER
On November 14, 2008, the U.S. District Court for the Southern District of New York entered a final judgment against defendants Michael W. Crow, Duncan Capital LLC, Duncan Capital Group LLC and Robert David Fuchs following a seven-day bench trial before U.S. District Judge Colleen McMahon. The court found that Crow and Duncan Capital Group LLC had unlawfully acted as an unregistered principal of Duncan Capital LLC, a registered broker-dealer, and were aided and abetted by the registered broker-dealer's principal, Robert David Fuchs.
The SEC's complaint alleges that from late 2003 through at least December 2004, Crow controlled virtually every significant aspect of Duncan Capital's operations and received the vast majority of the firm's profits. Duncan Capital's regulatory filings, however, 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 SEC's complaint also alleged that Fuchs, the owner and nominal president of Duncan Capital, made false regulatory filings on behalf of Duncan Capital and otherwise facilitated Crow's undisclosed control of the firm by, among other things, transferring Duncan Capital's profits to other entities Crow controlled.
On Nov. 5, 2008, the court issued its findings of fact and conclusions of law that form the basis for the final judgment entered today. The court found that Crow, Fuchs, Duncan Capital and Duncan Capital Group violated all of the reporting and registration provisions at issue in the SEC's complaint. The judgment permanently bars Crow from aiding and abetting violations of Sections 15(a), 15(b)(1) and 15(b)(7) of the Exchange Act and Rules 15b3-1 and 15b7-1; permanently bars Fuchs from aiding and abetting violations of Sections 15(a), 15(b)(1), 15(b)(7) and 17(a) of the Exchange Act and Rules 15b3-1, 15b7-1 and 17a-3(a)(12). The court also permanently enjoined Duncan Capital LLC from violating 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) and Duncan Capital Group LLC from violating Section 15(a) of the Exchange Act.
The court ordered that:
The court further ordered Crow and Fuchs to pay penalties of $250,000 and $125,000 respectively, and ordered Duncan Capital LLC and Duncan Capital Group LLC to each pay a penalty of $50,000.
Previously, the Commission reached a settlement with another defendant, Robert MacGregor.
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