SEC Brings Lawsuit Against Unregistered Broker Dealer

On May 15, the Securities and Exchange Commission filed a complaint against Behrooz Sarafraz in California federal court, alleging Sarafraz violated federal securities laws by acting as an unregistered broker dealer. According to the SEC, between February 2002 and April 2010, Sarafraz participated in the offer and sale of securities by TVC Opus I Drilling Program, LP and its managing partner, Tri-Valley Corporation. The SEC alleged that Sarafraz described the investment program to prospective investors and recommended that they purchase securities. Sarafraz allegedly received approximately $18.3 million in commissions, $1.9 million of which he paid to others for their referrals. The SEC asserted that these actions violated Section 15(a) of the Securities Exchange Act of 1934, and it sought an order requiring Sarafraz to disgorge illicit gains and pay a civil penalty, in addition to an injunction against further violations. The SEC announced that Sarafraz agreed to settle, without admitting or denying the allegations, by paying over $22.4 million in disgorgement plus interest and a civil penalty, and by consenting to an injunction. The US District Court for the Northern District of California has yet to approve the settlement. 

Securities and Exchange Commission v. Behrooz Sarafraz, C.A. No. 3:14-cv-02252 (N.D. Cal. May 15, 2014).

 

Topics:  Broker-Dealer, Civil Monetary Penalty, Disgorgement, Enforcement, SEC, Securities Exchange Act

Published In: Business Torts Updates, Finance & Banking Updates, Securities Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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