U.S. Securities and Exchange Commission

Litigation Release No. 21382 / January 19, 2010

Securities and Exchange Commission v. Jamie L. Solow, Civil Action No. 06-81041-CIV-Middlebrooks/Johnson (S.D. Fla.)

Federal Court Finds Jamie L. Solow in Contempt for Failure to Pay Disgorgement and Prejudgment Interest of Over $3.4 Million and Orders that He Surrender to the Custody of the U.S. Marshals to be Incarcerated Until Such Time as He Complies with the Court's Order to Pay.

On January 15, 2010, the Honorable Donald M. Middlebrooks of the U.S. District Court for the Southern District of Florida found Jamie L. Solow in contempt of court for failing to pay disgorgement and prejudgment interest of over $3.4 million ordered to be paid in a securities fraud case brought against him by the SEC. The sanction for Solow's contempt is that on January 25, 2010, he must report to the U.S. Marshal's Office to be taken into custody and incarcerated until he complies with the Court's order to pay.

Following a nine-day trial in January of 2008, a jury found Solow liable for violating the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act"), Exchange Act Rule 10b-5, and Section 17(a) of the Securities Act of 1933 ("Securities Act"), and for aiding and abetting violations of the net capital, books and records, and reporting provisions committed by one of his former firms, Archer Alexander Securities Corp. ("Archer Alexander"). The Commission's complaint alleged that in 2003, while associated with Archer Alexander, Solow engaged in a fraudulent trading scheme involving inverse floating rate collateralized mortgage obligations ("inverse floaters"), a highly complex, risky, and volatile type of mortgage-backed security derivative. The Commission's complaint also alleged that during 2003 to 2006, while associated with Archer Alexander and another registered broker, dealer, SAMCO Financial Services, Inc., Solow sold inverse floaters to retail investors with conservative to moderate investment objectives or low net worth for whom these complicated, volatile, and risky securities were unsuitable. Many of Solow's customers, including numerous elderly or retired investors, incurred heavy or total losses when they liquidated their accounts or were unable to meet margin calls involving the inverse floaters.

In its Order of Civil Contempt, the Court found that rather than pay the amounts ordered to be paid in the final judgment entered against him, Solow engaged in a purposeful campaign of asset dissipation by transferring his assets to his wife. Between January 2008 (the month in which his jury trial commenced) and April 2008 (several months after the jury's verdict against him), Solow and his wife liquidated securities accounts totaling over $1.5 million. Some of those funds were used to pay "asset protection attorneys" retained by Mrs. Solow a mere four (4) days after the jury verdict was entered against her husband. Moreover, in March 2008, Solow signed a $5.2 million mortgage on his residence in Hillsboro Beach. The proceeds of the mortgage were used to fund a CD now held by a Cook Islands trust for the benefit of Mrs. Solow. Notwithstanding these transfers, Solow claims to be a "ward of his wife" even though the Solows' accumulated wealth has been derived exclusively from income earned by Mr. Solow alone. Finding that Mr. Solow's inability to pay the judgment was self-created, the Court noted that "Solow still lives a luxurious lifestyle, enjoying the benefits of the money he has made over the years, yet he refuses to repay the victims of his fraud. Such a situation cannot stand."

Separately, the SEC filed a complaint for fraudulent transfer and foreclosure of equitable liens against Mrs. Solow that is also currently pending before Judge Middlebrooks. Securities and Exchange Commission v. Gina P. Solow, et al., Civil Action No. 09-61868-CIV-Middlebrooks/Johnson (S.D. Fla.).

See Also: SEC Complaint; Order of Civil Contempt


Last modified: 1/19/2010