Markets Wired

On February 5, 2019, the Securities and Exchange Commission obtained a final judgment against a New York-based broker who was charged with orchestrating a $6.5 million offering fraud.

In May 2015, the SEC charged Robert P. DePalo with defrauding over twenty investors by misrepresenting the value of their investments and use of their funds, including by sending the first $2.3 million of investor funds to his personal bank account.  The SEC also alleged that DePalo made false statements to SEC examiners in an attempt to conceal the fraud.

Based on conduct similar to that alleged in the SEC’s complaint, a New York State Supreme Court jury found DePalo guilty of criminal charges, which included grand larceny, money laundering, schemes to defraud, and other charges. DePalo was sentenced to 7-21 years in state prison, and ordered to pay full restitution to defrauded investors.

The SEC’s final judgment, entered on February 5, 2019, by the Honorable Kimba M. Wood of the U.S. District Court for the Southern District of New York, permanently enjoins DePalo from violating the antifraud provisions of Section 10(b) of the Exchange Act of 1934 and Rule 10b-5 thereunder and Section 17(a) of the Securities Act of 1933, and orders him to pay $6.5 million in disgorgement, which was deemed satisfied by the restitution order in the criminal case. On March 18, 2019, the SEC issued an order barring DePalo from the securities industry. The SEC also obtained final judgments against DePalo’s associates and entities controlled by DePalo.

The SEC’s investigation and litigation was conducted by Andrew Dean, Kerri Palen, and Nancy Brown, and was supervised by Lara S. Mehraban. The SEC appreciates the assistance of the New York County District Attorney’s Office, Financial Industry Regulatory Authority, Financial Conduct Authority in the United Kingdom, City of London Police, and Northumbria Police in the United Kingdom.