U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21390 / January 22, 2010
SEC v. Brian Travis, et al., Civil Action No. 09-10073 (S.D.N.Y.)
SEC Settles Fraud Charges Against Two Registered Representatives and a Broker-Dealer
The Securities and Exchange Commission announced today that on January 19, 2010, the Honorable P. Kevin Castel, United States District Judge for the Southern District of New York, entered final judgments against defendants David Harrison Baker, Daniel Schreiber, and the broker-dealer that Schreiber owns and controls, Granite Financial Group, LLC in SEC v. Brian Travis, et al., 09 CV 2288. The litigation remains pending against defendants Brian Travis and Nicholas Vulpis.
The Commission's complaint alleged that from March 2003 to October 2005, Travis and Vulpis, two employees of investment advisor JLF Asset Management LLC, solicited and accepted bribes from registered representatives of broker-dealers, including Baker and Schreiber. The bribes took the form of payments for expensive travel, rent for a personal residence, and daily car service. In exchange for those bribes, Travis and Vulpis directed trades, and the resulting commissions, to those broker-dealers paying the bribes. Travis and Vulpis did not disclose these bribes or the material conflict of interest that they created to the investment advisor, defrauding the hedge funds that JLF advised.
In connection with the settlement, Baker consented, without admitting or denying the allegations in the Commission's complaint, to an order permanently enjoining him against future violations of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940, and to pay a penalty of $100,000.
In connection with the settlement, Schreiber and Granite consented, without admitting or denying the allegations in the Commission's complaint, to orders permanently enjoining them against future violations of Sections 17(a)(2) and 17(a)(3) of the Securities Act, and to pay penalties of $100,000 and $250,000 respectively.
For further information, see Litigation Release No. 20948 (Mar. 12, 2009).