SEC Charges Former Government Official and Two Brokers in "Lavish" Pay-to-Play Scheme

The SEC charged a former official of a public pension fund and two brokers with orchestrating a scheme to steer billions in investments to certain firms in exchange for improper personal benefits.

According to the SEC, the former official allegedly used his position to funnel up to $2.5 million in state business to the two brokers. The SEC Complaint also determined that "[in] exchange for this lucrative business," the two brokers provided the former official with "luxury gifts, lavish vacations, and tens of thousands of dollars spent on cocaine and prostitutes."

SEC Enforcement Director Andrew J. Ceresney stated that:

"This action demonstrates that the SEC will not tolerate public officials who abuse public pension funds to satisfy their own greedy and wanton desires."

The SEC Complaint asserted that the former government official violated the anti-fraud provisions of the securities laws by failing to disclose the solicitation and receipt of the gifts and entertainment given by the two brokers. In addition, the SEC complaint stated that the two broker-dealers aided and abetted in his misconduct.

In a parallel action, the U.S. Attorney's Office for the Southern District of New York brought criminal charges against the two brokers and the former pension fund official.