Saturday, 1 October 2016
Last updated 10 hours ago
Jul 24 2009 | 10:00am ET
The Securities and Exchange Commission has charged the former chief compliance officer of WG Trading with helping orchestrate a $554 million investment fraud.
In February, the SEC filed an emergency action to stop the investment fraud at Greenwich, Conn.-based broker-dealer WG and obtained preliminary injunctions, asset freezes and other relief against the firm’s principals, Paul Greenwood and Stephen Walsh, who were the primary perpetrators of the fraud.
In addition, Deborah Duffy has been charged with allegedly aiding and abetting Greenwood and Walsh, who promised investors, which included several pension funds and educational institutions and endowments, that their money would be invested in a stock index arbitrage trading strategy at WG. Instead, they treated the investors' account as their personal piggy-bank to pay for their lavish lifestyles, which included multi-million dollar homes, luxury cars, horses and rare collectible items.
The SEC's complaint alleges that Duffy assisted in the fraud by knowingly wiring investor funds to Greenwood and Walsh's personal bank accounts and by creating phony "promissory notes" to cover up the fraud. Duffy knew that the funds she was wiring out of the investors' account were being used by Greenwood and Walsh for their personal expenses and were not being invested at WG. Duffy also misappropriated as much as $292,000 of investors' money for herself by wiring investor funds to accounts that she controlled or to third-parties to pay for personal items she purchased.
The complaint seeks a final judgment permanently enjoining Duffy from violating or aiding and abetting future violations of the federal securities laws and ordering her to disgorge her ill-gotten gains with prejudgment interest and to pay a civil monetary penalty.
Duffy has pleaded guilty today to related criminal charges brought by the U.S. Attorney's Office for the Southern District of New York involving the same conduct alleged in the SEC's complaint.