SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 17565 / June 14, 2002
Securities and Exchange Commission v. Roger A. Householder, Apex Capital Management Corporation, Apex Limited Partnership, Householder Accounting and Aapex Equity Advisors, Inc., (U.S.D.C. N.D. Illinois, Eastern Division, Civil Action No. 02-C-4128, filed June 10, 2002).
The Securities and Exchange Commission announced that on June 11, 2002, the Honorable Blanche M. Manning of the United States District Court in Chicago, Illinois entered orders freezing the assets of Roger A. Householder ("Householder"), a resident of Park Ridge, Illinois, Apex Capital Management Corporation, an investment advisory firm, and Apex Limited Partnership, an unregistered investment fund, enjoining these defendants from soliciting investors or receiving funds on behalf of Apex Capital and Apex L.P., and requiring these defendants to provide an accounting of investor funds. In addition, the Court entered a temporary restraining order against Householder enjoining him from further violations of the antifraud provisions of the federal securities laws.
The Commission's complaint, filed on June 10, 2002, alleges that from at least 1991 through March of 2000, Householder acted as investment adviser for a number of his accounting clients through his accounting firm, Householder Accounting Services, Inc. ("Householder Accounting"), recommending that his clients allow him to manage their investments and that they purchase securities through him and his accounting firm. In making these recommendations, Householder made misrepresentations and omissions of material fact to his clients about, among other things, the existence of the entities whose securities his clients were purchasing and the use of their investment dollars, and then misappropriated his clients' assets, resulting in the loss of more than $2.3 million.
The Commission's complaint also alleges that Householder committed fraud through Aapex Equity Advisors, Inc. ("Aapex Advisors"), an investment advisory firm run by Householder. Householder, acting through Aapex Advisors, conducted risky trading on behalf of a mutual fund that violated restrictions on its trading set forth in the fund's offering materials, resulting in the loss of all of the fund's assets.
The Commission's complaint further alleges that Householder, Apex Capital Management Corporation ("Apex Capital"), an investment advisory firm that Householder formed and for which he served as Director of Operations, and Apex Limited Partnership recently sold more than $790,000 in Apex L.P. securities without disclosing Householder's disciplinary history. Specifically these defendants failed to disclose that in October of 2000, the State of Illinois found that Householder had violated the Illinois securities laws and issued an order permanently prohibiting Householder from "[o]ffering or selling securities in or from the State of Illinois," and from "[r]endering investment advice for a fee in or from the State of Illinois." The Commission's complaint seeks, among other relief, to enjoin the defendants from further violations of Sections 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, Sections 206 and 207 of the Investment Advisers Act of 1940 and Rule 206(4)-4 thereunder, as well as disgorgement and appropriate civil penalties.