U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 16280 / September 13, 1999
SECURITIES AND EXCHANGE COMMISSION v. KEVIN C. SAMSON and SAMSON FINANCIAL GROUP, INC. , Civil Action No. 94-2081 (D.D.C.)
The Securities and Exchange Commission (“Commission”) announced today that, on September 10, 1999, the United States District Court for the District of Columbia ordered the entry of a permanent injunction against Kevin C. Samson (“Samson”) and Samson Financial Group, Inc. (“SFG”), thus settling the Commission’s civil action against them.
Without admitting or denying the Commission’s allegations, Samson and SFG consented to the entry of the judgment which permanently enjoins them from violating Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 (“Securities Act”), Sections 10(b) and 15(a)(1) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 10b-5 thereunder. The judgment also requires Samson and SFG to pay disgorgement and prejudgment interest, but waives payment of these amounts, and does not impose a civil penalty based on their demonstrated inability to pay.
The Commission alleged that, between October 1988 and November 1993, SFG and Samson fraudulently offered and sold more than $20 million worth of securities in the form of investment contracts representing interests in pools of promissory notes secured by residential real estate. The securities were sold to approximately 450 investors in the Washington, D.C. metropolitan area through 12 successive offerings.
In its complaint, the Commission charged that SFG and Samson, as president, chief executive officer, chairman of the board and principal shareholder of SFG, induced investors to purchase the securities by making various false and misleading representations about the degree of risk associated with the investments. Among other things, SFG and Samson misrepresented the criteria relating to the quality of promissory notes that would be purchased for the pools. Furthermore, the complaint alleged that Samson and SFG failed to disclose certain related party transactions, concealed information concerning the deteriorating performance of the promissory notes held in the pools, and generated undisclosed income by selling promissory notes to the pools in order to replace notes that were either repaid early or that were sold from the pools to institutional investors.
The complaint also charged that five of the offerings made by Samson and SFG were sold without being registered with the Commission and without any valid exemption from the registration requirements of the Securities Act. In addition, between February 1991 and October 1992, SFG and Samson offered and sold the securities without being registered with the Commission as a broker-dealer or as a person associated with a broker-dealer.
As part of the settlement, Samson also agreed to settle a proposed administrative proceeding pursuant to Section 15(b)(6) of the Exchange Act, to be based on the entry of the injunction, that will bar him from association with any broker or dealer. On September 13, 1999, the Commission issued an order instituting the proposed administrative proceeding against Samson, accepting his offer of settlement, and barring him from association with any broker or dealer.