SEC Charges Former Registered Representative with Defrauding Investors

Litigation Release No. 24798 / April 17, 2020

Securities and Exchange Commission v. Phillip W. Conley, No. 1:20-CV-70 (N.D. W.V. filed April 16, 2020)

On April 16, 2020, the Securities and Exchange Commission charged Phillip W. Conley, a West Virginia-based former registered representative, with conducting a $5.2 million fraudulent securities offering.

The SEC's complaint alleges that, between January 2014 and September 2018, Conley induced investors to purchase securities by making a series of materially false and misleading statements and omissions concerning the legitimacy of the investments and the use of investor proceeds. Conley allegedly failed to invest those proceeds as promised and instead comingled investor funds in bank accounts that he controlled. Conley allegedly used most of the funds for his personal benefit, including, among other things, private jet rentals, luxury purchases, dining, and entertainment, while using the remainder to make Ponzi-like payments to earlier investors.

The SEC's complaint, filed in federal district court in the Northern District of West Virginia, charges Conley with violations of 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 thereunder, and Sections 206(1), 206(2), and 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-8 thereunder. The complaint seeks a permanent injunction, disgorgement of ill-gotten gains, prejudgment interest, and civil monetary penalties.

The SEC's investigation was conducted by Michael F. McGraw and Brendan P. McGlynn in the Philadelphia Regional Office, and was supervised by Kelly L. Gibson. The litigation will be led by Jennifer C. Barry and Karen Klotz.