SEC Obtains Partial Judgment Against Wisconsin Investment Adviser Charged with Defrauding Clients
Litigation Release No. 25304/ January 10, 2022
Securities and Exchange Commission v. Michael F. Shillin, No. 3:21-cv-00601 (W.D. WI filed September 23, 2021)
On November 18, 2021, the United States District Court for the Western District of Wisconsin entered a partial judgment against defendant Michael F. Shillin in a previously filed civil action that charged Shillin with defrauding at least 100 advisory clients.
According to the SEC's complaint, which was filed on September 23, 2021, Shillin, while acting as an investment adviser, fabricated documents and made misrepresentations to clients, many of whom were elderly. As alleged, Shillin misrepresented that certain clients had successfully subscribed for IPO or pre-IPO shares in high-profile companies when they had not, and lied to clients about the true value of their investment portfolios. The complaint alleged that Shillin encouraged several advisory clients to roll over their existing life insurance policies into new policies, which caused certain clients to sell securities in order to pay premiums for policies that were non-existent or had far fewer benefits than Shillin claimed. Finally, the complaint alleged that Shillin received hundreds of thousands of dollars in ill-gotten gains as a result of his fraudulent conduct.
The SEC's complaint charged Shillin with violating 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) and (2) of the Investment Advisers Act of 1940. Without admitting or denying the SEC's allegations, Shillin consented to the entry of a judgment permanently enjoining him from violating these provisions. In addition, the judgment bars Shillin from acting as an officer or director of a public company and orders him to pay disgorgement, prejudgment interest, and a civil penalty in amounts to be determined by the court at a later date.
In a separate proceeding, based on the entry of the consent judgment and an order previously issued by the Wisconsin Department of Financial Institutions - Division of Securities, on January 7, 2022, the SEC issued an order permanently barring Shillin from association with any broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization, and from participating in any offering of a penny stock.