U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19113 / March 3, 2005
SECURITIES AND EXCHANGE COMMISSION V. PETER N. BRANT, Civil Action No. 1:05CV00453 (D.D.C.) (ESH) (filed March 3, 2005)
SECURITIES AND EXCHANGE COMMISSION V. RICHARD W. DEBOE, Civil Action No. 05 CV 2522 (S.D.N.Y.) (AKH) (filed March 3, 2005)
SEC FILES SETTLED FRAUD ACTION AGAINST RECIDIVIST PETER N. BRANT
BRANT AGREES TO PAY PENALTY OF $3 MILLION
SEC ALSO SUES RICHARD W. DEBOE FOR SECURITIES FRAUD
On March 3, 2005, the Securities and Exchange Commission filed a settled civil injunctive action in the United States District Court for the District of Columbia, alleging that Peter N. Brant ("Brant") violated a previous Commission order barring him from the securities industry by acting as an investment adviser to six customers of Deutsche Banc Alex Brown, Inc., now known as Deutsche Bank Securities, Inc. ("Deutsche Banc"). The Complaint alleges that while acting as an investment adviser in violation of the terms of the Commission's Order, Brant misappropriated client funds for his personal use, made unsuitable and unauthorized investment decisions, and traded in speculative stocks. The Complaint alleges that as a result of his fraud, Brant obtained at least $173,402.80 and caused his clients' accounts to drop dramatically in value.
Brant, without admitting or denying the Commission's allegations, has agreed to a final judgment: (i) permanently enjoining him from violating Section 17(a) of the Securities Act of 1933 ("Securities Act"), Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder, and Sections 206(1) and (2) of the Investment Advisers Act of 1940 ("Advisers Act"); (ii) ordering him, pursuant to Section 21(e) of the Exchange Act, to comply with the administrative bar order previously entered against him; (iii) ordering him to pay disgorgement of $173,402.80, plus prejudgment interest thereon; and (iv) ordering him to pay a civil penalty of $3 million. Brant has also agreed to a Commission order pursuant to Section 203(f) of the Advisers Act permanently barring him from associating with an investment adviser.
In a related action filed in the United States District Court for the Southern District of New York, the Commission alleged in its Complaint that Richard W. DeBoe ("DeBoe"), while employed as a registered representative at Deutsche Banc, engaged in fraudulent conduct in customer accounts and aided and abetted the fraudulent conduct in these same accounts by Brant. According to the Complaint, DeBoe, a former colleague and social friend of Brant, knew of Brant's conviction for felony securities fraud. Between 1998 and 1999, DeBoe opened four new accounts at Deutsche Banc for customers referred to him by Brant. The Complaint further alleges that each of the customers gave Brant trading authority. According to the Complaint, Brant's role as investment adviser and his acceptance of fees for these services violated his bar from the securities industry, which was known by DeBoe or he was reckless in not knowing.
Finally, the Complaint alleges that once the accounts were opened, DeBoe gave free rein to Brant over the accounts, participated with Brant in churning the accounts, violated explicit instructions from customers, and allowed Brant to misappropriate funds from DeBoe's customer accounts for Brant's own use. This fraudulent conduct generated substantial commissions for DeBoe, who before opening these accounts referred by Brant, had been a "low" producer who earned relatively low commission income.
The Commission's Complaint seeks a judgment against DeBoe: (i) permanently enjoining him from violating Section 17(a) of the Securities Act, permanently enjoining him from violating and aiding and abetting violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and from aiding and abetting violations of Sections 206(1) and (2) of the Advisers Act; (ii) ordering him to disgorge all unjust enrichment by reason of the conduct described in the Complaint plus prejudgment interest thereon; and (iii) awarding civil monetary penalties.