United States Securities and Exchange Commission
Litigation Release No. 21064 / May 29, 2009
Securities and Exchange Commission v. Mark R. Hamlin, Kingdom First Trading, LLC, and Kingdom First Corp., Case No. 1:09-CV-483 (W.D. Michigan, filed May 26, 2009)
The Securities and Exchange Commission announced that on May 26, 2009, it filed a civil injunctive action against Mark R. Hamlin (Hamlin), a resident of Owosso, Michigan, and two companies owned and controlled by Hamlin, Kingdom First Trading, LLC (KFT) and Kingdom First Corp. (KFC), for conducting a fraudulent, unregistered offer and sale of approximately $2 million in securities.
The SEC’s complaint, filed in the United States District Court for the Western District of Michigan, alleges that from approximately April 2005 through June 2008, Hamlin offered and sold securities to at least 90 investors and raised approximately $2 million. The complaint alleges that Hamlin represented to investors that he was a day trader who would invest their funds, along with other investors’ funds, in the stock market. The complaint further alleges that Hamlin told investors that he closed out all open positions at the end of the day and told some investors that he only invested in stocks. According to the complaint, Hamlin represented to some investors that he could double their money, had earned past investment returns exceeding 100%, and investors would not lose their money invested with him. According to the complaint, Hamlin, who acted as an unregistered investment adviser, also represented that he would send the investors weekly reports of his trading and their profits or losses and that he would not receive a commission or any other financial benefit unless the investments were profitable. In the weekly trading reports, Hamlin represented that the investors earned profits in all but seven weeks of trading during the period in question. The complaint alleges that Hamlin’s representations to investors regarding his use of investor funds, trading profits, and trading strategy were all false. Specifically, the complaint alleges that Hamlin did not invest all of the investor funds that he raised. Hamlin invested only a portion of the funds raised from investors, and used $668,000 of investor funds to pay his personal expenses and $755,000 to pay prior investors’ redemption requests. The complaint further alleges that Hamlin’s trading generated losses totaling approximately $644,862 and his trading was profitable for only nine of the 39 months of the offering and generated a total of only $22,150 in profit for those months. In addition, the Commission’s complaint alleges that Hamlin did not close out all open securities positions at the end of the day and frequently traded options.
Without admitting or denying the allegations in the SEC’s complaint, Hamlin, KFC, and KFT consented to the entry of an order of permanent injunction enjoining them from violations of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, enjoining Hamlin and KFC from violations of Sections 5(a) and 5(c) of the Securities Act, enjoining Hamlin from violations of Sections 206(1) and 206(2) of the Investment Advisers Act of 1940, and enjoining KFC from violations of Section 7(a) of the Investment Company Act of 1940. The order requires that Hamlin, KFC, and KFT pay disgorgement, jointly and severally, in the amount of $1,252,071 together with prejudgment interest in the amount of $340,197 for a total of $1,592,268, but waiving these amounts and not imposing a civil penalty against Hamlin or the entities based on their sworn statements of financial condition.