U.S. Securities and Exchange Commission
Litigation Release No. 21670 / September 28, 2010
Securities and Exchange Commission v. Brantley Capital Management, LLC, Robert Pinkas, and Tab Keplinger, Civil Action No. 1:09-CV-01906 (JSG) (N.D. Ohio) (filed August 13, 2009)
OHIO-BASED INVESTMENT ADVISER ROBERT PINKAS AND HIS FIRM SETTLE FRAUD CHARGES WITH SEC
The Securities and Exchange Commission announced that on September 28, 2010, the Honorable James S. Gwin, United States District Judge for the Northern District of Ohio, entered final judgments against defendants Robert Pinkas and his firm, Brantley Capital Management, LLC ("BCM"). Pinkas and BCM served as the investment advisers to Brantley Capital Corporation, a New York-based investment company, and Pinkas served as the CEO of both BCM and Brantley Capital. The final judgments, among other relief, permanently enjoin both defendants from violating the antifraud provisions of the federal securities laws and order Pinkas to pay more than $957,000 in disgorgement, prejudgment interest, and a civil penalty.
The SEC's complaint alleges that between 2002 and 2005, Pinkas, BCM, and its former part-time CFO substantially overstated the value of equity and debt investments in two failing private companies that represented more than half of the investment portfolio of Brantley Capital in order to generate higher investment advisory fees. The complaint further alleges that Pinkas, BCM, and the former BCM CFO made material misrepresentations and failed to make required disclosures about the two companies to Brantley Capital's board of directors, independent auditors, and investors.
Without admitting or denying the allegations in the SEC's complaint, Pinkas agreed to settle the SEC's action. He consented to the entry of a final judgment that permanently enjoins him from future violations of Securities Exchange Act of 1934 ("Exchange Act") Sections 10(b) and 13(b)(5) and Rules 10b-5, 13a-14, 13b2-1, and 13b2-2 and Investment Advisers Act of 1940 ("Advisers Act") Sections 206(1) and 206(2), and from aiding and abetting violations of Exchange Act Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) and Rules 13a-1 and 13a-13; orders him to pay a civil penalty of $325,000, disgorgement of $482,561, and prejudgment interest of $150,168; and bars Pinkas from serving as an officer or director of a publicly-traded company for five years. Pinkas also consented to the entry of a Commission order that will bar him for one year from associating with an investment adviser.
BCM also settled the SEC's action, without admitting or denying the SEC's allegations, by consenting to the entry of a final judgment that permanently enjoins BCM from future violations of Exchange Act Sections 10(b) and 13(b)(5) and Rules 10b-5 and 13b2-1 and Advisers Act Sections 206(1) and 206(2), and from aiding and abetting violations of Exchange Act Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) and Rules 13a-1 and 13a-13.
The Commission previously reached a settlement in this litigation with the former BCM part-time CFO, Tab Keplinger. See Lit. Rel. No. 21178 (August 13, 2009).