SEC Actions Roundup: Bridge Premium Finance Settles Over Alleged $6M Ponzi Scam, Ex-Lancer Group Hedge Fund Manager’s Lawyer Sues Over FOIA Request, & Private Equity Firm Ranieri Partners Settles Securities Allegations

SEC Settles with Bridge Premium Finance Over Alleged $6M Ponzi
The U.S. District Court for the District of Colorado has approved a proposed settlement between the SEC and Premium Finance LLC, William Sullivan, and Michael Turnock. The three of them are accused of selling financing so that small businesses could cover their insurance premiums. The alleged Ponzi scam purportedly cost investors $6 million, even as they were promised up to 12% in returns.

Judge John Kane had initially rejected the proposed settlement, which came with SEC’s standard language allowing defendants to resolve cases without denying or admitting to the allegations. Pointing to strong federal policy that favors consent judgments and the “limited and deferential” review the courts have over such agreements, last month the Commission asked the court to reconsider. It also noted that such admissions could hurt the regulator’s enforcement program, potentially causing harm to the public. Turnock and Sullivan also filed a response to the complaint and admitted to some of the allegations.

Ex-Lancer Group Hedge Fund Manager’s Lawyer Sues the Commission Over FOIA Request
David Dorsen, the attorney for former Lancer Group hedge fund manager Michael Lauer, is suing the Securities and Exchange Commission for allegedly failing to respond properly to a Freedom of Information Act request. The SEC had sued Lauer in 2003, accusing him of misrepresenting hedge funds’ value. He was ordered to pay $62 million. Lauer has since been combatting the decision, even up to a certiorari petition that the US Supreme Court rejected last year.

Now, in his FOIA case, Dorsen is contending that the regulator sued his client without having pursued or received the right to carry out a formal probe and without sending a Wells notice to Lauer. Dorsen says that this case is a “public service” intended to enhance accountability and transparency on the part of the SEC.

Private Equity Firm Ranieri Partners Settles Securities Fraud Allegations
In re Ranieri Partners LLC, the private equity firm has settled SEC allegations accusing William M. Stephens, an unregistered broker, of improperly soliciting over $500 million from investors for funds run by Ranieri. Donald W. Phillips, an ex-Ranieri senior managing partner, was tasked with supervising Stephens.

Per the regulator, as a consultant Stephens’ job was to merely act as a “finder.” Yet, the Commission contends, the private equity fund sent him due diligence materials, private placement memoranda, and other documents to give to investors. Stephens even allegedly gave investment advice to one Ranieri client.

The Commission believes that Phillips disregarded the “red flags” indicating that Stephens was working beyond the scope of his designated duties. To settle the securities fraud allegations, Ranieri will pay $375,000, Phillips will pay $75,000, and Stephens has agreed to an industry bar. All of them settled without admitting to or denying the securities allegations.

Freedom of Information Act

Mortgage pioneer Ranieri’s firm settles SEC charge, Reuters, March 11, 2013

SEC v. Bridge Premium Finance LLC
(PDF)


More Blog Posts:
Demand Notes Used to Help Pay For Ailing Real Estate Business Were Securities, Says District Court, Stockbroker Fraud Blog, March 23, 2013

Bulk of American Securitization Forum’s Board Resigns
, Institutional Investor Securities Blog, March 21, 2013