South Florida Arbitration & Litigation Lawyer Blog
Securities and Exchange Commission Decision as to Walter V. Gerasimowicz, Meditron Asset Management, LLC, and Meditron Management Group, LLC, is Declared Final
The initial decision of an administrative law judge with respect to Walter V. Gerasimowicz, Meditron Asset Management, LLC (“MAM”), and Meditron Management Group, LLC (“MMG”) (Respondents), has become final. The law judge found that on May 3, 2013, after Respondents’ offer of settlement, the Commission issued an order (Continuation Order) that required Respondents to pay disgorgement and third-tier civil penalties. The disgorgement and penalty amounts were decided by summary disposition, pursuant to 17 C.F.R. ‘ 201.250. Walter V. Gerasimowicz, Admin. Proc. No. 3-15024 (A.L.J. Apr. 19, 2013). The Respondents were ordered to pay disgorgement, jointly and severally, of $3,143,029.41, plus prejudgment interest, and pay third-tier civil penalties, jointly and severally, of $1,950,000.
Walter V. Gerasimowicz was the sole owner, Chairman, CEO and CCO of MAM, a registered investment adviser. He was also the sole owner of an unregistered investment adviser MMG. Respondents were found to have violated the antifraud provisions within the meaning of Section 21B(b)(3) of the Exchange Act, 203(i)(2) of the Advisers Act, and 9(d)(2) of the Investment Company Act, when they illicitly used funds obtained from investors totaling approximately $2,650,000, in order to keep solvent a private company, where Gerasimowicz served as its President and Chairman of the Board. The funds were lost and the company was bankrupted. The law judge ordered Respondents to disgorge $2,650,000, the amount of diverted funds stipulated in the Continuation Order, and $493,029.41, representing management and incentive fees retained by Respondents. The law judge also found that there were “no unique or compelling reasons” why prejudgment interest should not accrue in accordance with 17 C.F.R. ‘ 201.600, and so ordered Respondents to pay the prejudgment interest on the total disgorgement amount of $3,143,029.4. The law judge also found that Respondents violated the antifraud provision and that their violative actions “involved fraud [and] reckless disregard of a regulatory requirement” within the meaning of Sections 21B(b)(3) of the Exchange Act, 203(i)(2) of the Advisers Act, and 9(d)(2) of the Investment Company Act such that substantial penalties were warranted because Respondents abused the fiduciary duty owed to their advisory client. A total third-tier penalty amount of $1,950,000 was ordered against Respondents, jointly and severally. The law judge found that Gerasimowicz had not introduced any evidence to support his assertion of his inability to pay any disgorgement, interest, or penalties ordered in the proceeding.
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