On December 7, 2017, the Securities and Exchange Commission announced that it had charged a registered representative in Pennsylvania with running an offering and investment advisory fraud. The SEC’s complaint alleges that Paul W. Smith raised roughly $2.35 million from approximately 30 investors. Many of the victims were customers of Smith’s brokerage.
The complaint suggests that Paul Smith told investors that he would invest their money in publicly traded securities through The Haverford Group, which was an outside partnership that Smith formed, but did not disclose to his broker-dealer employers. The complaint alleges that Smith made few securities investments and instead used a lot of the money to repay other investors and for his own personal purposes.
Smith has agreed to settle the SEC’s action against him. The defendant has agreed to pay disgorgement and prejudgment interest of $362,858.45. Smith has also agreed to plead guilty in the parallel criminal action brought by the United States Attorney’s Office for the Eastern District of Pennsylvania. The settlement is subject to court approval. Additional details can be found here.