U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23600 / July 25, 2016
Securities and Exchange Commission v. James Hugh Brennan, III, et al., Civil Case No. 1:16;-cv-00307 (E.D. Tenn.)
On July 22, 2016, the Honorable Travis R. McDonough of the Eastern District of Tennessee entered a court-ordered asset freeze to halt an ongoing fraud by two former brokers with disciplinary histories who allegedly raised more than $5 million from investors without using the money as promised.
In an emergency action filed in federal court in Chattanooga, Tenn. On July 20, 2016, the SEC alleged that James Hugh Brennan III and Douglas Albert Dyer sold purported shares in eight similarly named companies to more than 240 investors since 2008 without ever registering the stock as they promised. Instead, according to the SEC's complaint, Brennan and Dyer transferred investor funds into their personal accounts or those belonging to their wives. The SEC further alleged that Brennan and Dyer continue to solicit investors while touting their securities industry experience and failing to disclose Brennan had been banned from the brokerage industry and Dyer suspended and fined for executing unauthorized transactions in customers' accounts.
The SEC's complaint alleges that Brennan, Dyer, and their company Broad Street Ventures have violated Section 17(a) of the Securities Act of 1933 as well as Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. The SEC seeks disgorgement of ill-gotten gains plus interest and penalties as well as permanent injunctions. The SEC also seeks penny stock and officer-and-director bars against Brennan and Dyer. The court's order issued this morning freezes the assets of Broad Street, Brennan, and Dyer. Their spouses are named as relief defendants in the SEC's complaint for the purposes of recovering ill-gotten gains deposited in their accounts.