U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19792 / August 3, 2006
SEC v. Robert J. Bradbury, Dolphin & Bradbury, Incorporated and Margaret B. Bradbury as Relief Defendant, United States District Court for the Eastern District of Pennsylvania, Civil Action No. 06-CV-3435
SEC Sues Broker for Defrauding Pennsylvania School Districts
The Securities and Exchange Commission today filed civil charges against Robert Bradbury of Chester County, Pennsylvania, and his firm Dolphin & Bradbury Incorporated, a broker-dealer located in Philadelphia, Pennsylvania. The SEC alleges that the two defendants defrauded four Pennsylvania school districts by repeatedly selling them a series of risky, short-term notes issued to finance a speculative golf course in central Pennsylvania. The notes defaulted on September 1, 2004, resulting in losses to the school districts that exceed $11 million.
According to the Commission's complaint:
- Defendants knew or were reckless in not knowing that the notes were both impermissible investments under state law for the school districts and unsuitable investments for entities such as school districts with conservative investment objectives;
- Bradbury and his firm failed to distribute a disclosure document concerning the notes or otherwise disclose to the school districts the material risks associated with these investments;
- Bradbury on behalf of his firm executed numerous false and misleading documents to conceal the fraud;
- Defendants exploited the relationships of trust and confidence that they had developed over the years with the school districts; and
- Bradbury and his firm sold the notes to the four school districts from 1999 through 2004 because they had no other place to sell them.
The Commission's complaint also names Bradbury's wife, Margaret, as a relief defendant. The Commission alleges that Bradbury transferred over $5.41 million of assets to her for little or no consideration in an effort to hinder, delay or defraud the Commission and other creditors.
The Commission has charged defendants with, among other things, violations of the antifraud provisions of the federal securities laws as well as regulations relating to the review and distribution of official statements by brokers. In its action, the Commission seeks permanent injunctive relief, disgorgement of ill-gotten gains or avoided losses with prejudgment interest, civil monetary penalties, an officer and director bar for Bradbury, and the setting aside of Bradbury's fraudulent transfers to his wife.