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U.S. Securities and Exchange Commission


Litigation Release No. 21102 / June 24, 2009

Securities and Exchange Commission v. Regan & Company and Michael C. Regan, Civ. No. 09-CIV 5799 (WHP) (S.D.N.Y.)


The Securities and Exchange Commission today charged Michael C. Regan (Regan) and his firm, Regan & Company (Regan & Co.), for conducting a multi-million dollar Ponzi scheme that touted safe investments and provided lofty, but false, investment returns. The Commission alleges that from 2001 through April 2008, Regan and Regan & Co. fraudulently obtained at least $15.9 million and ultimately caused investors to lose at least $6.69 million through Regan's misappropriation and trading losses. Regan and Regan & Co. have agreed to settle the Commission's charges, without admitting or denying the allegations.

The Commission's action, filed in the U.S. District Court for the Southern District of New York, alleges that over an eight year period Regan offered and sold securities in his now defunct investment fund, dubbed the River Stream Fund, by falsely representing to investors that he would invest their funds in the stock market. Regan also represented that, because of his trading expertise and successful investment record, investors could expect annual returns averaging twenty percent, with minimal risk to their principal. Contrary to his representations, Regan did no securities trading at all for several years, used less than half of the funds entrusted to him for trading purposes, and suffered substantial losses on investments that he did make. Regan repeatedly concealed his misconduct and deceived investors by preparing and sending them fictitious account statements and tax forms showing artificially inflated balances and returns. Instead of protecting the investors' principal and delivering the promised returns, Regan misappropriated and used millions of dollars of investor funds to support his extravagant lifestyle and to satisfy withdrawal requests from some investors.

The Commission's complaint charges Regan and Regan & Co. with violating Section 17(a) of the Securities Act of 1933, Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934, and Sections 206(1), 206(2), 206(4) and Rule 206(4)-8 of the Investment Advisers Act of 1940. The complaint seeks permanent injunctions, disgorgement of ill-gotten gains plus prejudgment interest, and civil monetary penalties against both Regan and Regan & Co.

Regan and Regan & Co. agreed to settle the Commission's claims against them and consented to the entry of a judgment, subject to approval by the court, that enjoins them from violating or aiding or abetting future violations of the above provisions of the securities laws, orders them jointly and severally liable for $8,700,933.04 in disgorgement and prejudgment interest (which will be deemed satisfied by entry of the restitution order that is anticipated in the parallel criminal case), and defers determination of civil money penalties to a later date.

Separately, today the United States Attorney's Office for the Eastern District of New York (USAO) announced criminal charges against Regan for the same misconduct alleged in the Commission's complaint.

The Commission acknowledges the assistance and cooperation of the USAO and the New York Office of the United States Postal Service in this matter.

SEC Complaint



Modified: 06/24/2009