SEC Obtains Fraud Judgment Against Former Investment Adviser

Litigation Release No. 24709 / January 7, 2020

Securities and Exchange Commission v. Kelter, No. 3:17-cv-01441 (M.D. Tenn. filed Nov. 9, 2017)

On January 6, 2020, the U.S. District Court for the Middle District of Tennessee entered a final consent judgment in a previously-filed SEC enforcement action against Jay Costa Kelter, a former registered investment adviser and registered representative. The SEC's action, filed November 9, 2017, charged Kelter with defrauding three retired clients out of more than $1.85 million. As alleged, Kelter made material misrepresentations to these clients, including false guarantees concerning investor losses, and misappropriated $1.4 million of client funds for his own use.

In a parallel criminal matter, Kelter pled guilty to one count of securities fraud and one count of wire fraud. He was sentenced to 29 months imprisonment and ordered to pay restitution of $1.467 million.

To resolve the SEC's allegations, Kelter consented to the entry of the final judgment, enjoining him from future violations of the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, Section 17(a) of the Securities Act of 1933, and Sections 206(1) and (2) of the Investment Advisers Act of 1940. The judgment orders Kelter to pay disgorgement of $1.467 million and prejudgment interest of $331,985, deemed satisfied by the restitution ordered against him in the criminal case. Kelter also consented to an order permanently barring him from the securities industry.

The investigation and litigation were conducted by Brittany Hamelers, Christina McGill, and Christian D.H. Schultz of the SEC's Home Office. This matter was supervised by Associate Director Melissa Hodgman, Assistant Director Timothy N. England, and Supervisory Trial Counsel Frederick L. Block. The SEC appreciates the assistance of the U.S. Attorney's Office for the Middle District of Tennessee and the Federal Bureau of Investigation's Nashville Resident Agency.