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U.S. Securities and Exchange Commission

Litigation Release No. 18625 / March 16, 2004


Securities and Exchange Commission v. Carlos H. Soto, Basle Advisers and ICR Corporation, Case No. 04-1105-JP.

The United States Securities and Exchange Commission (SEC) announced that on February 20, 2004, after a two-day hearing, the Honorable Jaime Pieras, Jr., of the United States District Court for the District of Puerto Rico, orally entered a preliminary injunction against defendant Carlos H. Soto and relief defendants Basle Advisers and ICR Corporation. A written order will follow. The preliminary injunction order continues the relief originally obtained on February 11, 2004 in response to the SEC's emergency civil injunctive action that sought a temporary restraining order, disgorgement and civil penalties against Soto and other relief against the defendants.

The SEC's complaint alleges that defendant Soto, while employed at Morgan Stanley DW, Inc., raised at least $50 million by telling investors that he would invest their funds in low risk mortgage-backed securities issued by the Government National Mortgage Association (commonly-called "Ginnie Maes"), but instead diverted the investors' money to accounts in the names of relief defendants Basle Advisers and ICR Corporation. The complaint further alleges that Soto used the funds for personal use and to engage in speculative and risky trading, including short sales. The SEC continues to seek additional relief, including a permanent injunction and civil money penalties against Soto and disgorgement of ill-gotten gains against all defendants.

On February 19, 2004, Soto was arrested in San Juan, Puerto Rico. The United States Attorney's Office in Puerto Rico has charged Soto with one count of securities fraud and one count of mail fraud based on the same conduct. United States of America v. Soto, Case No. 3:04-mj-00060-JA.

For more information on earlier actions in this case see Litigation Release No. 18574 (February 12, 2004).


Modified: 03/16/2004