The U.S. District Court for the Middle District of Florida has granted the Securities and Exchange Commission’s motion for emergency relief, including an asset freeze, to prevent North American Clearing Inc. from misusing customer funds. The general securities and clearing brokerage company is accused of using client funds to finance its daily operations and conceal its financial state.
The SEC says it also obtained an order appointing a receiver over North American Clearing, as well as a temporary restraining order. The SEC had filed securities fraud and other charges against North American, its president Bruce B. Blatman, its director and founder Richard L. Goble, and ex-financial and operations principal Timothy J. Ward on May 27, 2008 one day before the district court granted its requests.
With approximately 40 correspondent brokers, North American Clearing Inc. handles over 10,000 customer accounts. The SEC says that its own actions indicative of the SEC’s dedication to protecting investors.
The misconduct allegedly started earlier in 2008 when the SEC says that the clearing company used customer securities as collateral to obtain a bank loan. It also increased its reserves in an account that is supposed to benefit clients. As a result, the clearing company’s own funds for daily expenses became depleted.
The SEC charges that North American “improperly sold customer money market funds as a means of temporarily freeing up funds that it then used to pay for daily operating expenses” on several occasions and that the defendants acted to overstate net customer money-market purchases. North American then illegally withdrew over $3 million from its customer reserves.
Any investors who loses money because of the misconduct of a broker-dealer, a financial adviser, or another member of the securities industry is entitled to legal remedies so they can get their money back. Contact the stockbroker fraud law firm of Shepherd Smith and Edwards today.
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