SEC Enforcement: Fake Broker Charged With Selling Phony Stock to Pay Gambling Debt

Rowe can't apply for reinstatement without satisfying a number of conditions, one of which is the satisfaction of financial penalties ordered by agencies other than the SEC. Rowe, who declared bankruptcy, still has financial penalties pending.

He has settled with the SEC without admitting or denying the charges. Electronics Exec Charged With Insider Trading

Dennis Wayne Hamilton, an executive at Stamford, Connecticut-based electronics company Harman International Industries, has been charged by the SEC with insider trading in the company's stock.

According to the agency, Hamilton made more than $130,000 in illegal profits by trading on nonpublic information he learned on the job in advance of Harman's release of its fiscal 2014 first-quarter earnings.

In his role as Harman's vice president of tax, Hamilton reviewed Harman's earnings and learned the company would report stronger-than-expected results for its FY14 first quarter — from July 1 to Sept. 30, 2013.

The day before Harman publicly released the financial results, Hamilton purchased 17,000 shares of Harman stock at a cost of more than $1.2 million — a position he liquidated once the quarterly results were publicly announced. Since the stock price had risen more than 12% on the news, Hamilton's illicit trading got him one-day profits in excess of $130,000.

The SEC's investigation is continuing, and in a parallel action, the U.S. Attorney's Office for the District of Connecticut has also announced criminal charges against Hamilton.

— Check out FINRA Bars 2 Brokers in Hedge Fund Fraud on ThinkAdvisor.

The SEC has charged Gregory Ruehle, an unregistered broker in Oceanside, California, with fraudulent stock sales.

According to the agency, Ruehle raised approximately $1.9 million from about 100 investors after he claimed to be selling them stock in a medical devices company. However, he never delivered the stock, and instead used the money for personal expenses, including the payoff of gambling debts.

As early as 2012, Ruehle, who was a former consultant for La Jolla, California-based ICB International, Inc., promised investors in California and Minnesota that he would sell them shares of company stock that he personally owned. But he sold way more stock than he ever actually owned, and the shares he did have weren't transferable.

To make it worse, Ruehle fabricated documents that he told investors were from the company, and he even sent out faked stock certificates to tell each investor how much stock they "owned"—and sent the phony certificates along with another faked document: a letter claiming that the securities had been transferred from him to the investor. As an additional touch, he also sent phony confirmations attesting to the transfer of shares; the confirmations were on faked company letterhead and were supposedly signed by the company's CEO.

The SEC seeks disgorgement plus prejudgment interest and penalties against Ruehle. Its investigation is continuing, and in a parallel action, the U.S. Attorney's Office for the Southern District of California has also announced criminal charges against Ruehle.