U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23996 / November 21, 2017
Accounting and Auditing Enforcement Release No. 3908 / November 21, 2017
Securities and Exchange Commission v. Jay Mac Rust and Christopher K. Brenner, No. 16-cv-03573 (S.D.N.Y. filed May 13, 2016)
SEC Obtains Judgment Against Attorney Who Defrauded Escrow Clients in Securities Fraud Scheme
The Securities and Exchange Commission announced that it obtained a final judgment by default on November 13, 2017 against Jay Mac Rust, an attorney whose license to practice law was suspended for three years by the State Bar of Texas as of August 15, 2017. The case involved a scheme to defraud by Rust and a co-defendant in connection with the offer and sale of securities.
The amended default judgment, entered by the Honorable Edgardo Ramos of the U.S. District Court for the Southern District of New York, permanently enjoins Rust from violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and orders Rust to pay disgorgement and pre-judgment interest of $191,783.01 and a civil money penalty of $160,706.79.
On May 13, 2016, the SEC charged Rust and his co-defendant, Christopher K. Brenner, with fraud for making undisclosed risky investments and in some instances outright stealing money they obtained in escrow accounts from small business owners seeking commercial loans. On June 9, 2017, the SEC obtained a partial judgment against Brenner that permanently enjoined him from violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and ordered him to pay disgorgement, pre-judgment interest, and a civil money penalty in amounts to be determined at a later date. Brenner consented to the issuance of a June 21, 2017 Commission Order suspending him from appearing and practicing before the SEC as an attorney. Brenner neither admitted nor denied the allegations in the complaint or the findings in the Order. On October 6, 2017, the SEC filed a motion with the Court seeking disgorgement and a civil money penalty against Brenner, which remains pending.
The examination that uncovered the misconduct was conducted by broker-dealer examiners in the New York office. The ensuing investigation was conducted by Daphna A. Waxman, Tuongvy T. Le, and Valerie A. Szczepanik. The litigation is being led by Richard G. Primoff, and the case is being supervised by Lara S. Mehraban.
For further information, see Litigation Release No. 23865 (June 21, 2017)