SEC Sues 10 Brokers|in Ponzi Aftermath

     WASHINGTON (CN) – The SEC on Monday filed administrative charges against 10 former brokers at an Albany, N.Y. firm whose co-owners were sentenced to prison for a $125 million Ponzi scheme.
     The SEC filed an emergency action in 2010 to stop the scam at McGinn Smith & Co. and freeze its assets and the assets of its owners, Timothy M. McGinn and David L. Smith.
     McGinn and Smith were criminally convicted, the SEC said in a statement announcing the new charges. McGinn was sentenced to 15 years in federal prison and Smith to 10 years.
     The scam cost 750 investors a total of $80 million, the SEC said.
     It claims the 10 broker-defendants made material misrepresentations and omissions to customers in recommending the unregistered investments.
     “As securities professionals, these brokers had an important duty to determine whether the securities they recommended to customers were suitable, especially when red flags were apparent,” SEC New York Regional Director Andrew Calamari said in a statement. “These registered representatives performed inadequate due diligence and failed to fulfill their duties.”
     Charged in the cease and desist order were:
     Donald J. Anthony, Jr. of Loudonville, N.Y.
     Frank H. Chiappone of Clifton Park, NY.
     Richard D. Feldmann of Delmar, N.Y.
     William P. Gamello of Rexford, N.Y.
     Andrew G. Guzzetti of Saratoga Springs, N.Y.
     William F. Lex of Phoenixville, Pa.
     Thomas E. Livingston of Slingerlands, N.Y.
     Brian T. Mayer of Princeton, N.J.
     Philip S. Rabinovich of Roslyn, N.Y.
     and Ryan C. Rogers of East Northport, N.Y.
     Guzzetti was managing director of McGinn Smith’s private client group from 2004 to 2009 and supervised brokers who recommended the company’s products. The SEC said. “Despite his knowledge of serious red flags, Guzzetti failed to take any action to investigate the offerings and instead encouraged the brokers to sell the notes to McGinn Smith customers,” according to the SEC statement.

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