By: Ryan Corbin , Fall 2014 Student Intern
On September 26, 2014, the SEC charged four insurance agents with unlawfully selling securities as part of a multi-million dollar scheme targeting elderly investors. According to the SEC, “the scheme primarily targeted retired annuity holders by using insurance agents to sell interests in a company called Arete LLC, which was controlled by the Colorado man orchestrating the scheme: Gary Snisky.” Snisky has already been charged by the SEC and the matter is pending in federal court in Colorado. For this scheme, the insurance agents told investors that their money would be used to purchase government-backed agency bonds at a discount. However, these bonds were never purchased and, in fact, Snisky allegedly misappropriated approximately $2.8 million of investor funds to pay commissions and make personal mortgage payments. In total, the scheme raised approximately $4.3 million over about an 18-month period.
The SEC alleges that three of the four insurance agents raised $1.5 million for Snisky and received almost $90,000 in commissions. They are charged with violating Section 15(a) of the Exchange Act. According to Julie K. Lutz, Director of the SEC’s Denver Regional Office, individuals selling securities must “comply with registration, supervision, and compliance requirements that exist to protect investors.” These insurance agents allegedly failed to comply with these requirements. The fourth insurance agent entered into a cooperation agreement with the SEC and settled for $207,213.34. He also agreed to be barred from the securities industry.
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