U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19015 / December 27, 2004
SEC v. Brad A. Weaver and Beta Asset Management, Inc., Civil Action No. 04 C 8279 (N.D. Ill., filed December 23, 2004)
SEC OBTAINS TEMPORARY RESTRAINING ORDER AND ASSET FREEZE AGAINST BRAD A. WEAVER AND BETA ASSET MANAGEMENT, INC.
The Securities and Exchange Commission announced that the Honorable Rebecca R. Pallmeyer, U.S. District Court Judge for the Northern District of Illinois, entered an Order on Thursday, December 23, temporarily restraining Brad A. Weaver, a Chicago resident, and his company, Beta Asset Management, Inc., from violating the antifraud provisions of the federal securities laws. The Order also freezes their assets.
In its Complaint, the Commission alleges that since March 2003, Weaver and Beta Asset Management, Inc. have raised more than $10 million by telling at least five investors that they could profitably trade in the "error accounts" of a broker-dealer at no risk. The Defendants' so-called error account trading strategy did not and could not have existed. The Complaint further alleges that the Defendants induced investors to "roll over" their alleged error account trading profits into a limited partnership. The Defendants represented that the limited partnership had $30 million in assets at an offshore company. Contrary to their representations, the limited partnership never had more than $30,000 in assets at the offshore company. The Complaint also alleges that the Defendants have repeatedly delayed making requested payouts to investors strongly suggesting that the Defendants are currently attempting to raise money from new investors to repay current investors, as in a ponzi scheme. Specifically, the Order temporarily restrains Weaver and Beta from engaging in fraud in violation of Section 17(a) of the Securities Act of 1933, and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.
The Commission acknowledges the assistance of the U.S. Attorney's Office for the Northern District of Illinois and the Federal Bureau of Investigation in this matter.