SEC Brings An Action Against Another GC
On September 26, 2006 the Commission’s Division of Enforcement announced a cease-and-desist proceeding against Scott G Monson, former general counsel of J.B. Oxford Holdings, Inc. (JBOH), and its wholly owned broker-dealer firms, J.B. Oxford & Co. and National Clearing Corporation (NCC), for his role in a late trading scheme facilitated by NCC. http://www.sec.gov/litigation/admin/2006/ic-27497.pdf. The Commission alleged that as General Counsel, Monson drafted late trading agreements that provided NCC’s institutional customers with the ability to confirm, cancel, or revise mutual fund trades after 4:00 p.m. Eastern time, utilizing information that was not available to other fund shareholders required to make trading decisions before 4:00 p.m. http://www.sec.gov/litigation/admin/2006/ic-27497-o.pdf. The Enforcement Division also alleged that Monson failed to properly analyze the agreement to determine whether it complied with SEC rules and regulations or whether it was appropriate for NCC to accept mutual fund trades after 4:00 p.m. On January 18, 2006, in a related proceeding and without admitting or denying the allegations against them, JBOH, NCC, and three former NCC officers agreed to a settlement for their participation in the late trading scheme. http://www.sec.gov/litigation/litreleases/2006/lr19641.htm. NCC disgorged over $1 million in the settlement, paid a civil penalty of $1 million, and paid prejudgment interest in the amount of $69,000. JBOH agreed to cease and desist from future violations of the federal securities laws and to refrain from having a controlling interest in or operating a firm engaged in the broker-dealer clearing business for a period of five years. The three officers each paid civil penalties and, among other sanctions, were barred from associating with any broker dealer for a period ranging from three to five years.