Court Enters Judgments Against Investment Adviser Firm and Owner for Undisclosed Compensation Practices
Litigation Release No. 25138 / July 7, 2021
Securities and Exchange Commission v. Westport Capital Markets, LLC and Christopher E. McClure, Civil Action No. 3:17-cv-02064 (D. Conn., filed December 11, 2017)
On July 6, 2021, a federal district court in Connecticut entered final judgments against investment adviser Westport Capital Markets, LLC and its sole owner, Christopher E. McClure. The judgments order that Westport Capital and McClure are jointly and severally liable for disgorgement of $632,954, along with $187,807 in prejudgment interest, for a total disgorgement and prejudgment interest amount of $820,761. In addition, Westport is ordered to pay a civil penalty of $500,000, and McClure is ordered to pay a civil penalty of $200,000.
The judgments follow a March 16, 2020 jury verdict finding that Westport Capital and McClure defrauded their advisory clients by repeatedly purchasing securities that generated significant undisclosed compensation, thereby enriching themselves at their clients' expense. The jury found that defendants acted intentionally, knowingly, or recklessly under Section 206(1) of the Investment Advisers Act, and that defendants willfully violated Section 207 of the Advisers Act. The court previously granted the SEC partial summary judgment, holding that, in violation of Sections 206(2) and 206(3) of the Advisers Act, Westport Capital and McClure acted at least negligently in failing to disclose these conflicts of interest.
The SEC's litigation was handled by Michael Moran of the SEC's Asset Management Unit and Senior Trial Counsel Kathleen Shields, both in the Boston Regional Office.