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U.S. Securities and Exchange Commission

U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 23984 / November 13, 2017

Securities and Exchange Commission v. Jay Costa Kelter, No. 3:17-cv-1441 (M.D. Tenn. filed November 9, 2017)

SEC Charges Georgia Man for Defrauding Retirees

The Securities and Exchange Commission filed charges against Georgia-based Jay Costa Kelter, a former investment adviser and broker representative, for defrauding three retired clients out of more than $1.856 million.

According to the SEC's complaint, filed in federal court in Tennessee, from September 2013 through 2016, Kelter made misrepresentations to three clients and used their money to fund expensive purchases for himself. When Kelter left his former employer in 2013, he convinced the three seniors to move their accounts to a new brokerage firm, so he could continue to provide investment advice and trade on their behalf. The clients opened new accounts at TD Ameritrade and gave Kelter access to the accounts. As alleged in the complaint, Kelter sold securities in two of his clients' accounts to make unauthorized payments to his company BEK Consulting Partners, LLC. Kelter falsely told the two clients that BEK was a company that he was investing in on the clients' behalf. In fact, the SEC alleges that Kelter used the misappropriated client funds as his own personal piggy bank, buying a luxury car, paying for his personal day-to-day expenses, using one client's funds to return money to another client, and using the funds for futures and options trading in unrelated accounts. Kelter also allegedly guaranteed a third client that he would cover his trading losses up to $200,000, inducing the client to allow Kelter to continue to trade in his account. Kelter falsely told that retiree that he had substantial assets and access to personal funds to fulfill his guarantee when, as alleged, he had no such financial resources.

The SEC's complaint charges Kelter with violating the antifraud provisions of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, and Sections 206(1) and (2) of the Investment Advisers Act of 1940. The SEC is seeking civil penalties, disgorgement of ill-gotten gains plus prejudgment interest, and permanent injunctive relief.

The U.S. Attorney's Office for the Middle District of Tennessee announced an action against Kelter with respect to one of his clients.

The SEC's investigation has been conducted by Brittany Hamelers and Christina McGill and supervised by Timothy N. England and Melissa R. Hodgman. The SEC's litigation is being conducted by Charles Stodghill and Ms. Hamelers. The SEC appreciates the assistance of the Federal Bureau of Investigations and the U.S. Attorney's Office for the Middle District of Tennessee.

SEC Complaint

 

https://www.sec.gov/litigation/litreleases/2017/lr23984.htm


Modified: 11/13/2017