U.S. SECURITIES AND EXCHANGE COMMISSION v. SPARTAN SECURITIES GROUP, LTD ISLAND CAPITAL MANAGEMENT CARL E. DILLEY MICAH J. ELDRED DAVID D. LOPEZ
February 20, 2019·8:19-cv-00448-VMC-CPT·Per Curiam·By James Taylor
The Eleventh Circuit affirmed the district court's decision in a securities fraud case involving Spartan Securities Group and Island Capital Management. The court upheld the SEC's enforcement action against the defendants for making false statements to obtain FINRA clearance and DTC eligibility.
The SEC brought an enforcement action against Spartan Securities Group, Island Capital Management, and their principals for their roles in facilitating microcap securities fraud schemes. The defendants were accused of making false statements to obtain FINRA clearance and DTC eligibility for shell companies.
The court’s reasoning
The court found that the defendants made multiple misrepresentations, including false statements about the issuers’ officers contacting Spartan and misrepresentations about the status of stocks as free-trading. The court concluded that these misrepresentations were material and connected to the purchase or sale of securities.
What it means going forward
The decision upholds the SEC’s ability to enforce securities laws against entities that facilitate fraudulent schemes by making false statements to regulatory bodies.
