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Monday, November 17, 2014

SEC FILES EMERGENCY ACTION IN ALLEGED MILLION DOLLAR MISAPPROPRIATION CASE

FROM:  U.S. SECURITIES AND EXCHANGE COMMISSION 
Litigation Release No. 23130 / November 12, 2014
Securities and Exchange Commission v. Eric W. Johnson, Civil Action No. 1:14-cv-08825

On November 5, 2014, the Securities and Exchange Commission filed an emergency action alleging that from at least 2004 to the present, Eric W. Johnson, of Hinsdale, Illinois, misappropriated at least $1 million from certain of his advisory clients. The SEC's complaint alleged that he did so while affiliated with a Chicago-based broker-dealer and investment adviser. The SEC's complaint further alleged that Johnson admitted to the SEC that he misappropriated the funds by forging his clients' signatures on more than 100 separate wire transfer instructions so that he could funnel cash from his clients' accounts directly into his own personal bank account. The complaint charged Johnson with violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5(a) and (c) thereunder and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940.

After a hearing on the matter, the Honorable Edmond E. Chang of the United States District Court, Northern District of Illinois, issued an Order granting injunctive relief, freezing assets and other emergency relief including expedited discovery.

The SEC's investigation in this matter is continuing.

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