SEC Obtains Fraud Judgments Against Overseas Broker Dealer and Investment Manager
Litigation Release No. 24546 / July 29, 2019
SEC v. Beaufort Secs. Ltd. and Kyriacou, No. 18-CV-1317 (E.D.N.Y.)
On July 25, 2019, the United States District Court for the Eastern District of New York entered judgments by consent against defendants Beaufort Securities Ltd. and Panayiotis Kyriacou in an SEC enforcement action. In March 2018, the Commission charged Beaufort, a U.K.-based broker-dealer, and Kyriacou, an investment manager at Beaufort, with fraud in connection with manipulative trading in the securities of a U.S.-based microcap issuer.
According to the SEC's complaint, Beaufort and Kyriacou manipulated the market for the common stock of a U.S.-based microcap issuer. The complaint alleged that in 2016, an undercover FBI agent approached Beaufort and Kyriacou, and described his business as manipulating U.S. stocks through pump-and-dump schemes. The agent later requested that Beaufort and Kyriacou open brokerage accounts for him in the names of nominees to conceal his identity and his connection to the anticipated trading activity in the accounts. Beaufort and Kyriacou opened the accounts as instructed. The SEC further alleged that Beaufort and Kyriacou executed multiple purchase orders of shares of a microcap company with the understanding that the undercover agent had arranged for an associate to simultaneously offer an equivalent number of shares.
The judgments against Beaufort and Kyriacou, entered by consent on July 25, 2019 by the U.S. District Court for the Eastern District of New York, enjoin them from violating the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and bar them from participating in penny stock offerings. Beaufort and Kyriacou consented to their respective judgments without admitting or denying the allegations in the complaint. Kyriacou's settlement reserves the issues of any additional remedies, including disgorgement, prejudgment interest, and civil penalties, for further determination by the court upon motion of the SEC.
The charges arose in part from an undercover operation by the Federal Bureau of Investigation, which also resulted in related criminal prosecutions against Beaufort and Kyriacou by the Office of the United States Attorney for the Eastern District of New York. Beaufort is currently being liquidated by U.K. court-appointed Administrators.
The SEC appreciates the assistance of the Office of the United States Attorney for the Eastern District of New York, the Federal Bureau of Investigation, the Internal Revenue Service, the Alberta Securities Commission, the Ontario Securities Commission, the Financial Conduct Authority of the United Kingdom, and the Financial Industry Regulatory Authority.