U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 22683 / April 23, 2013
Securities and Exchange Commission v. Gibraltar Global Securities Inc. and Warren A. Davis, Civil Action No. 13 Civ 2575 (S.D.N.Y.)
SEC Charges Bahamian Broker-Dealer and Its President for Operating Illegally in the United States and Participating in an Unregistered Offering.
On April 18, 2013, the Securities and Exchange Commission filed a complaint charging Gibraltar Global Securities, Inc. a Bahamas-based broker-dealer, with unlawfully operating as a broker-dealer in the United States, and for participating in an illegal unregistered offering and sale of over 10 million shares of a microcap issuer, Magnum d'Or. The Commission also charged Warren A. Davis, Gibraltar's owner and president as Gibraltar's control person with respect to Gibraltar's unlawful activities as an unregistered broker-dealer and for his participation in the unregistered offering and sale of Magnum d'Or shares.
According to the SEC's complaint, beginning in 2008 and continuing through August 2012, Gibraltar Global Securities, Inc., through its website, solicited United States customers by advertising brokerage services, including the formation of offshore business corporations with nominee officers and directors that would enable U.S. customers to trade anonymously.
The SEC alleges that Gibraltar attracted U.S. customers looking to sell shares of low-priced thinly traded microcap issuers. According to the complaint, Gibraltar routinely accepted deposits of microcap stocks and arranged to have them re-titled into Gibraltar's name. After the shares were re-titled, Gibraltar followed its customers' orders and sold the shares through various securities accounts maintained in Gibraltar's name at United States broker-dealers. The complaint alleges that from approximately March 2008 through August 2012, Gibraltar sold approximately $100 million of microcap shares on behalf of U.S. customers, charging them commissions of between 2-3%.
In addition, the SEC's complaint also alleges that Gibraltar and Davis participated in the unregistered offering and sale of over 10 million shares of Magnum d'Or on behalf of U.S. customers for proceeds of over $11 million in violation of Sections 5(a) and (c) of the Securities Act of 1933.
The SEC's Complaint was filed in the U.S. District Court for the Southern District of New York, and seeks, among other things, a permanent injunction, disgorgement of ill-gotten gains, with interest, and civil money penalties.
The Commission would like to acknowledge the assistance of the Internal Revenue Service, the Financial Industry Regulatory Authority, the Alberta Securities Commission, the British Columbia Securities Commission; and the Bahamas Securities Commission for their assistance in this matter.