SEC BRINGS CHARGES FOR OPERATION OF UNREGISTERED BROKERAGE BUSINESS

FROM:  U.S. SECURITIES AND EXCHANGE COMMISSION 

Litigation Release No. 23283 / June 11, 2015

Securities and Exchange Commission v. Joshua A. Yudell and OCFB LLC, et al., Civil Action No. 1:15-cv-4548 (S.D.N.Y. June 11, 2015)

SEC Charges Individual with Operating an Unregistered Brokerage Business

The Securities and Exchange Commission charged a New York-based individual, operating through numerous doing-business-as entities, with effecting transactions in securities while neither he nor any of the entities he controlled were registered with the Commission as a broker or dealer.

The SEC alleges that, beginning at least as early as April 2010, Joshua A. Yudell, operating through OCFB LLC; Oxford Advisors, Inc.; Oxford Capital Advisors, LLC; Oxford Capital Alternative Investments, Inc.; Oxford Capital Fund, LP; and Oxford Capital Fund, LLP; entered into numerous agreements with securities owners pursuant to which he would obtain custody and control over their securities, attempt to sell the securities into the market, and then provide the net proceeds, minus Yudell's fees, to the securities owners. Yudell agreed to pay a total of $4,420,568.87 to settle the SEC's charges.

Without admitting or denying the allegations in the SEC's complaint, Yudell consented to the entry of a final judgment that, among other things, orders him to pay disgorgement, prejudgment interest, and financial penalties, and permanently enjoins him from violating Section 15(a)(1) of the Securities Exchange Act of 1934.

The proposed settlement is subject to court approval.

COURT FINDS BROKERAGE FIRM AND TWO FORMER EXECUTIVES LIABLE FOR FRAUD AND MISAPPROPRIATION

FROM: U.S. SECURITIES AND EXCHANGE COMMISSION

Court Finds Brokerage Firm and Two Former Executives Liable for Over $2.74 Million in a Fraudulent Misappropriation Case

The Securities and Exchange Commission announced today that, on April 25, 2013, a federal court in New York found defendants Joshua Constantin and Windham Securities, Inc. jointly and severally liable for over $2.49 million and defendant Brian Solomon liable for over $249,000 in disgorgement, pre-judgment interest, and civil penalties. In addition, the court found relief defendants Constantin Resource Group, Inc. (CRG) and Domestic Applications Corp. (DAC) jointly and severally liable with Constantin and Windham for over $760,000 and $532,000, respectively, of disgorgement and pre-judgment interest.

On July 6, 2011, the SEC filed its complaint. The complaint alleged that Windham, Windham's owner and principal Constantin, and former Windham managing director Solomon fraudulently induced investors to provide more than $1.25 million to Windham for securities investments. The complaint alleged that defendants made false claims to the investors about the intended use of the investors' funds and about Windham's investment expertise and past returns. Instead of purchasing securities for the investors, the defendants misappropriated the investors' funds and then provided false assurances to the investors to cover up their fraud. The SEC's complaint charged Windham, Constantin, and Solomon with violating Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder. The complaint also named CRG and DAC, entities Constantin owned and/or controlled, as relief defendants. Â

On July 3, 2012, the SEC moved for summary judgment against each of the defendants and relief defendants on all of the SEC's claims. On April 2, 2013, the court issued an opinion granting the SEC's motion in its entirety and finding defendants liable for fraud. Based on the undisputed evidence, the court found that "[t]he litany of misrepresentations that Solomon and Constantin made to their clients is striking;" that Constantin "diverted [investors'] funds to his own purposes;" and that "both Solomon and Constantin provided clients with misleading documents to cover up the fraudulent nature of their investment scheme." The court concluded that permanent injunctions, disgorgement, and civil penalties were warranted against each of the defendants and that the relief defendants would be required to disgorge any assets they received through the defendants' misconduct.

On April 25, 2013, the court issued a supplemental order finding Windham, Constantin, Solomon, CRG, and DAC collectively liable for more than $2.74 million in disgorgement, pre-judgment interest, and civil penalties.