U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 22710 / May 31, 2013
Securities and Exchange Commission v. Robert A. Gist, et al., Civil Action No. 1:13-cv-01833-AT (N.D.Ga., May 31, 2013)
SEC Charges Atlanta Attorney with Converting Investor Funds
On May 31, 2013, the Securities and Exchange Commission charged Robert A. Gist (“Gist”), an Atlanta attorney and former sports agent, and Gist, Kennedy & Associates, Inc. (“Gist Kennedy”) (collectively, “Defendants”), a company that Gist controls, with defrauding at least 32 customers out of at least $5.4 million while acting as an unregistered broker from approximately 2003 to the present.
According to the SEC’s complaint filed in the U.S. District Court for the Northern District of Georgia, Gist obtained the customers’ funds on the fraudulent pretense that he would invest conservatively on their behalves in corporate bonds and other securities. The complaint alleges that Gist invested none of the customer funds, but, instead, used the funds for his personal expenses, for the payment of purported dividends and proceeds from securities sales that he falsely claimed to have purchased on behalf of his customers, and for the operation of a company that he controlled until early 2013 known as ENCAP Technologies, LLC. The complaint further alleges that Gist regularly created and provided the customers of Gist Kennedy with fictitious account statements.
The complaint alleges that Gist used at least $2.2 million of the converted customer funds for the operation of ENCAP Technologies, LLC (“ENCAP”) during the time that he controlled ENCAP, and that the company gave nothing of value in return for the money. The complaint names ENCAP as a relief defendant and seeks disgorgement from it of unjust enrichment in the amount of at least $2.2 million plus prejudgment interest.
Without admitting or denying the SEC’s allegations, Defendants Gist and Gist Kennedy agreed to settle the case against them. The settlement is pending final approval by the court. Specifically, the Defendants consented to the entry of an order permanently enjoining Defendants Gist and Gist Kennedy from future violations of Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rules 10b-5 thereunder; permanently enjoining Gist from future violations of Section 15(a) of the Exchange Act; finding Defendants jointly and severally liable for $5.4 million in disgorgement plus prejudgment interest, imposing civil penalties to be determined upon motion of the Commission, freezing the Defendants’ assets, and providing other relief.