U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21960 / May 5, 2011
District Court Finds Richard L. Goble Liable for Fraud
Securities and Exchange Commission v. North American Clearing, Inc., et al., Civil Action No. 06-08-cv-829-Orl-35KRS (M.D. Fla.)
On April 27, 2011, Judge Mary Scriven found Richard L. Goble liable for committing fraud and aiding and abetting his clearing firm’s violations of the Customer Protection Rule and books and records provisions of the Securities Exchange Act of 1934 in SEC v. North American Clearing, Inc., et al., Case No. 6:08-cv-829-Orl-35KRS (M.D. Fla., May 28, 2008). North American Clearing, Inc., was a broker-dealer that acted as the clearing firm for approximately 40 correspondent firms and more than 10,000 customer accounts. Goble, a former FINRA board member, was the founder, sole owner, and a director of North American.
Following a five-day bench trial, the judge found “it clear from the evidence of record, that North American had financial problems and Defendant Goble and North American’s executives made a substantial effort to conceal it.” Specifically, the judge found Goble acted with the “highest degree of scienter” in directing North American to falsely record a $5 million money market purchase, which artificially lowered the firm’s reserve requirement under the Customer Protection Rule and allowed North American to improperly withdraw more than $3 million from its Exclusive Benefit of Customers (EBOC) Account. The Court further found this “sham” transaction constituted fraud on the market.
As a result, the Court permanently enjoined Goble from violating Sections 10(b), 15(c)(3), and 17(a) of the Exchange Act and Rules 10b-5, 15c3-3, and 17a-3 thereunder. Additionally, on its own initiative, the Court enjoined Goble from attempting to secure any securities licenses or otherwise attempting to engage in the securities business. The Court also ordered him to pay a reduced civil penalty amount of $7,500 based, in part, on her consideration that Goble’s firm had been liquidated in a Securities Investor Protection Corporation bankruptcy proceeding.
The Commission commenced this action by filing its complaint on May 27, 2008, against North American Clearing, Inc., Goble, its president Bruce Blatman and its former financial and operations principal Timothy Ward. The other defendants previously settled the Commission’s charges against them by consenting, without admitting or denying the Commission’s allegations, to permanent injunctions. Pursuant to his
settlement, the Court previously ordered Blatman to pay a civil penalty. A civil penalty amount against Ward is still to be decided.