SEC Charges Former Brokers with IIIegally Selling Securities
Litigation Release No. 24873 / August 24, 2020
Securities and Exchange Commission v. Minish "Joe" Hede and Kevin Graetz, Civil Action No. 20-cv-06724 (S.D.N.Y., filed August 21, 2020)
The Securities and Exchange Commission announced charges against two former registered representatives, Minish "Joe" Hede and Kevin Graetz, for acting as unregistered brokers in the sale of securities issued by Belize Infrastructure Fund I, LLC (Belize Fund).
According to the SEC's complaint, Hede and Graetz sold approximately $9.6 million worth of Belize Fund notes to their customers at the brokerage firm where they were then employed, even though the firm had already declined to approve the Belize Fund's notes for offer and sale to its customers. As alleged, by selling a security that was not approved by the firm, Hede and Graetz engaged in a prohibited practice called "selling away." The complaint alleges that Hede and Graetz profited through the commissions from the sales, while the firm's customers suffered significant losses. The SEC charged Belize Fund and its owner, Brent Borland, in 2018, alleging that Borland misappropriated more than $5.98 million of funds obtained from investors in Belize Fund notes and used the stolen principal to fund his family's lavish lifestyle.
The SEC's complaint, filed in the U.S. District Court for the Southern District of New York, alleges that Hede and Graetz violated the broker registration provisions of Section 15(a) the Securities Exchange Act of 1934. The SEC seeks injunctive relief, disgorgement of ill-gotten gains and prejudgment interest, and civil money penalties.
The SEC's investigation was conducted by Drew O'Brien and Don Ryba and supervised by C.J. Kerstetter. The SEC's litigation will be led by Eric Phillips.