In the Matter of Jay T. Comeaux:
The Securities and Exchange Commission recently announced the issuance of an Order Instituting Administrative Proceedings Pursuant to Section 8A of the Securities Act of 1933, Sections 15(b) and 21C of the Securities Exchange Act of 1934, Sections 203(f) and 203(k) of the Investment Advisers Act of 1940, and Section 9(b) of the Investment Company Act of 1940, Making Findings, and Imposing Remedial Sanctions, and a Cease-and-Desist Order against a former executive of Stanford Group Company (SGC), a dually registered U.S. broker-dealer and investment adviser owned by Robert Allen Stanford. In the Order, the Commission finds that SGC defrauded investors of certificates of deposit (CDs) issued by an affiliated Antiguan bank, Stanford International Bank (SIB). The Commission finds that Jay T. Comeaux, SGC’s former Executive Director and President, knew that SGC marketed and sold SIB CDs to U.S. investors as safe and secure based on the purported liquid and marketable composition of SIB’s underlying investment portfolio. Comeaux also knew, however, that SIB refused to disclose the details of its investment portfolio to him or to any other SGC executives or representatives, so nobody at SGC could verify the purported size, liquidity, and marketability of the assets in SIB’s investment portfolio. The Commission also finds that SGC: (i) marketed and sold SIB CDs to U.S. investors as being supported by a “comprehensive insurance program” that provided “depositor security;” and (ii) trained its financial advisors that FDIC insurance was “relatively weak” in comparison to SIB’s robust insurance program. However, Comeaux knew that the SIB CDs were not insured and that SIB did not maintain insurance that was the equivalent of – or better than – FDIC protection.
Without admitting or denying the SEC’s charges, Comeaux consented to the entry of a final judgment enjoining him from future violations of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. Comeaux agreed to be barred from association with any broker, dealer, investment adviser, municipal securities dealer, municipal adviser, transfer agent, or nationally recognized statistical rating organization; from acting as an employee, officer, or director of a registered investment company; and from participating in any penny stock offering. Comeaux also agreed to participate in further administrative proceedings to determine what, if any, additional remedial action, including disgorgement and financial penalties, is appropriate.
A hearing will be scheduled before an administrative law judge to determine what remedial sanctions, if any, are necessary and appropriate in the public interest. The Order directs the Administrative Law Judge to issue an initial decision no later than 300 days from the date of service of the Order on Comeaux. (Rel. 33-9355; File No. 15002).
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