U.S. SECURITIES & EXCHANGE COMMISSION
Litigation Release No. 18227 / July 10, 2003
SEC v. William Clark Davis, Civil Action No. 3: 03 CV 7332 (N.D. Ohio)
The U.S. Securities and Exchange Commission ("Commission") today announced that on July 9, the Honorable James G. Carr, U.S. District Judge for the Northern District of Ohio, in Toledo, entered an order preliminarily enjoining William Clark Davis of Lambertville, Michigan, from violating the anti-fraud and registration provisions of the federal securities laws. Davis consented to the order, which also froze his assets and ordered him to provide a sworn accounting to the Commission.
In its complaint, filed on July 9, the Commission alleged that: (1) Davis is a former registered representative of Continental Capital Securities, Inc. and Continental Capital Investment Services, Inc., brokerage firms registered with the Commission; (2) since at least May 2001, Davis forged customer signatures on letters of authorization to sell conservative securities in his customers' brokerage accounts and used the proceeds to purchase at least $715,900 of unsecured promissory notes on their behalf, without their knowledge or consent; (3) Davis was an officer, director, manager, or general partner of all of the entities that issued the promissory notes and exerted power and control over them; (4) Davis diverted proceeds from the sale of the notes for his own use; and (5) overall, Davis sold at least $12 million in promissory notes to over 90 investors in Ohio and Michigan.
In addition to the relief already obtained, the complaint seeks a permanent injunction from violations of Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder; disgorgement plus prejudgment interest of Davis's ill-gotten gains; and a civil penalty.
The Commission acknowledges the assistance and cooperation of the U.S. Attorney's Office for the Northern District of Ohio, the U.S. Postal Inspection Service, the Ohio Bureau of Criminal Identification and Investigation; the Ohio Department of Commerce Division of Securities; and the National Association of Securities Dealers.