SEC wins case against unregistered broker-dealer principal

17 November 2008

The Securities and Exchange Commission has won a ruling against a man who it says made millions of dollars in commissions controlling a broker-dealer firm despite being unregistered as a company officer and violating the reporting provisions of US securities laws.

During a seven-day trial, the court heard that Michael Crow had controlled "virtually every significant aspect" of New York-based Duncan Capital, taking the "vast majority" of the company's profits.

However, the firm's regulatory filings did not identify Mr Crow as one of its officers, directors or control affiliates.

Duncan Capital's owner and "nominal president", Robert David Fuchs, was found guilty of making false regulatory reports and transferring part of the company's profits to entities controlled by Mr Crow.

The court ordered Mr Crow and Duncan Capital to pay $1.9 million illegally gained profits and prejudgment interest, Mr Fuchs to return £282,874.95 and Mr Crow, Mr Fuchs, Duncan Capital and the Duncan Capital Group to disgorge a total of $4.9 million in ill-gotten gains.

Furthermore, Mr Crow and Mr Fuchs must pay individual fines of $250,000 and $125,000 respectively. Duncan Capital and the Duncan Capital Group must each pay a $50,000 fine.

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