Markets Wired

On July 22, 2019, the Securities and Exchange Commission obtained final judgments against three former senior executives of the now-defunct brokerage consulting business, Global Transition Solutions, LLC (GTS), for their roles in a multimillion dollar transition management fraud.

The SEC previously charged GTS, its brokerage affiliate, its former Chief Executive Officer, John T. Place, its former President, John P. Kirk, and its former General Counsel and Chief Operating Officer, Paul G. Kirk, with misleading current and prospective customers about the fees GTS charged in connection with securities transactions. According to the SEC’s complaint, the defendants told many of their customers that GTS would receive only clearly disclosed commissions charged on customers’ trades when, in reality, GTS also received additional revenue from mark-ups and mark-downs charged by other brokers and shared with GTS. On February 14, 2019, the Court granted in part the SEC’s motion for summary judgment, finding, among other things, that there is no genuine issue of material fact as to GTS’ fraud, including that statements GTS made regarding its commissions and fees were false and material.

Without admitting or denying the SEC’s allegations, John Place, John Kirk, and Paul Kirk each consented to the entry of final judgments permanently enjoining them from violating the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and the registration provisions of Section 15(c)(1) of the Exchange Act. John Kirk agreed to pay disgorgement of $379,795, prejudgment interest of $99,974, and a civil penalty of $379,795; Paul Kirk agreed to pay disgorgement of $90,939, prejudgment interest of $23,938, and a civil penalty of $90,939; and John Place agreed to pay disgorgement of $375,803 and prejudgment interest of $57,688. The Court did not order Place to pay a civil penalty in light of his cooperation during the litigation. Place previously consented to an order barring him from the securities industry, which was issued on December 20, 2018. The Kirks both consented to the entry of SEC orders, issued on July 31, 2019, barring them from the securities industry, and Paul Kirk consented to an SEC order barring him from appearing or practicing as an attorney before the Commission. The SEC resolved its lawsuit against GTS and its brokerage affiliate in April 2017.

The SEC’s investigation was conducted by Ellen F. Bortz and Richard E. Johnston under the supervision of Jennifer S. Leete. The SEC’s litigation was led by Daniel J. Maher and Melissa J. Armstrong.