U.S. Securities and Exchange Commission
Litigation Release No. 18363 / September 25, 2003.
Securities and Exchange Commission v. Eduardo A. Masferrer, Juan Carlos Bernacé and John M.R. Jacobs, Civil Action No. 03-22524-CIV-Jordan/Brown (S.D. Florida, filed September 25, 2003).
SEC Charges Three Miami Bankers With Fraud
The United States Securities and Exchange Commission ("SEC") announced today that it filed a federal civil action charging Eduardo A. Masferrer ("Masferrer"), Juan Carlos Bernacé ("Bernacé") and John M.R. Jacobs ("Jacobs") with securities fraud. Masferrer, Bernacé and Jacobs were officers of Hamilton Bancorp, Inc. ("Hamilton"), the publicly-traded holding company for Hamilton Bank, N.A. ("Hamilton Bank"), a Miami-based former national bank.
Specifically, Masferrer was the president, chief executive officer and chairman of Hamilton, Bernacé was its executive vice president and a director, and Jacobs was its senior vice president and chief financial officer.
According to the complaint, the SEC alleges that Hamilton Bank, through Masferrer, Bernacé and Jacobs, engaged in a series of manipulative exchange transactions designed to fraudulently allow the bank to hide tremendous losses associated with severely impaired foreign investments. The SEC alleges that, as a result of these transactions, which took place during the period of about September 1998 and September 1999, Hamilton materially overstated its income and other financial results in periodic filings made with the Commission and in press releases issued to the public. Moreover, Hamilton is alleged to have failed to make and keep books, records and accounts, and to devise and maintain a system of internal controls as required by the federal securities laws.
The SEC's complaint alleges that, as a result of the conduct described above, Masferrer, Bernacé and Jacobs violated Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder, and aided and abetted Hamilton's violations of Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and Rules 12b-20, 13a-1 and 13a-13 thereunder. The complaint further alleges that Bernacé and Jacobs violated, in addition to the above provisions, Rule 13b2-2 promulgated under the Exchange Act. The SEC seeks permanent injunctions, officer and director bars, disgorgement of ill-gotten gains plus prejudgment interest and the imposition of civil money penalties against Masferrer, Bernacé and Jacobs.