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Wednesday, June 19, 2024 | Back issues
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Investment Firm Fined|by Texas Regulator

AUSTIN, Texas (CN) - The Dallas-area investment firm for which Texas Attorney General Ken Paxton solicited clients and was fined has itself been fined by the Texas State Securities Board for failing to disclose the bankruptcy of its founder, plagiarism and altering disclosure documents.

The board's April 18 disciplinary order directs Frederick Eugene Mowery to pay $40,000 for two violations of the Texas Securities Act. Mowery and his investment firm, Mowery Capital Management, were ordered to pay another $50,000 for four additional violations of the act and for administrative fees.

Mowery and his firm have 15 days to comply with the order.

The board said Mowery's firm plagiarized a letter to clients on its website from an article by Larry Kudlow published in 1999. It also found the firm failed to disclose a bankruptcy filing by Mowery in September 2005.

"Several of MCM's clients were aware of Mr. Mowery's bankruptcy petition, but others were not," the 24-page order said. "Two of MCM's former clients stated that awareness of that petition could have affected their decisions to employ MCM."

The board said Mowery admitted in May 2014 to altering disclosure documents signed and dated by clients.

"Mr. Mowery removed both an old address and his current address from the bottom of the documents," the order said. "It would have been obvious that the disclosures were signed after 2013 if MCM's current address had appeared on those documents."

Paxton is not a party to the disciplinary order. He was reprimanded and fined $1,000 by the board two years ago after he admitted he had solicited clients for his friend Mowrey and Mowery's firm without being registered as an investment advisor.

A subsequent investigation by the Texas Rangers resulted in Paxton being charged last year with two first-degree felony counts of securities fraud and a third-degree felony count of failing to register with the state securities board. Paxton is awaiting trial and faces up to life in state prison if convicted.

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