U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23815 / April 26, 2017
U.S. Securities and Exchange Commission v. John T. Place, et al., No. 16-cv-04291 (E.D. Pa. filed Aug. 8, 2016)
SEC Obtains Final Judgment Against Global Transition Solutions, Inc. in Transition Management Fraud Case
On April 24, 2017, the Securities and Exchange Commission obtained a final judgment against Global Transition Solutions, Inc. (GTS, Inc.)
The SEC charged GTS, Inc., Global Transition Solutions, LLC (GTS, LLC) (together, GTS), and three former officers of GTS, Inc. and GTS, LLC in a complaint filed in federal court in Philadelphia, Pennsylvania on August 8, 2016 with fraud for misleading their current and prospective customers about the fees they charged in connection with securities transactions. According to the SEC's complaint, John T. Place, GTS' Chief Executive Officer, John P. Kirk, GTS' President, and his brother, Paul G. Kirk, GTS' General Counsel and Chief Operating Officer, operated GTS, Inc. and a related consulting firm, GTS, LLC, as a "transition management" brokerage consulting business. The complaint alleges that GTS assisted its customers - largely public pension funds - in handling large orders to buy and sell securities when transitioning a large portfolio from one investment manager or strategy to another, or liquidating it. The complaint further alleges that Place and the Kirk brothers told many of their customers that GTS would receive only explicitly disclosed commissions charged on customers' trades. In reality, GTS also received additional revenue from mark-ups and mark-downs taken by other brokers and shared with GTS. Over the course of the scheme, GTS received at least $13 million in undisclosed payments.
Without admitting or denying the allegations in the SEC's complaint, GTS, Inc. consented to the entry of a final judgment permanently enjoining the company from violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Section 15(c)(1) of the Exchange Act. The SEC dismissed its claims against GTS, LLC, which is now defunct. The SEC's litigation continues against the remaining individual defendants.
The SEC's investigation, which is continuing, has been conducted by Ellen F. Bortz and Richard E. Johnston under the supervision of Jennifer S. Leete. The SEC's litigation is being led by Daniel J. Maher and Stephan J. Schlegelmilch.