Investment Adviser Charged with Securities Fraud and Other Violations

December 20, 2010

The SEC brought fraud charges against Alfred Clay Ludlum III of Wilmington, Delaware and his wholly-controlled companies, Printz Capital Management, LLC, a registered investment adviser, Printz Financial Group, Inc., and PCM Global Holdings, LLC (the “Printz Entities”).

The SEC alleges that from approximately June 2006 through June 2009, Ludlum raised approximately $700,000 from at least 27 investors (including 21 of Ludlum’s advisory clients) through unregistered offerings of equity and debt securities in the Printz Entities. The SEC stated that Ludlum fraudulently obtained approximately $80,000 in loans from one of his advisory clients and misappropriated approximately $72,000 more from three advisory clients' accounts without their authorization.

According to the SEC, Ludlum told investors and his advisory client lender that their funds would be used for working capital and to grow and operate the businesses of the Printz Entities. In fact, however, Ludlum used most of the funds to support his lavish lifestyle, pay his personal expenses, and repay other investors. According to the SEC, Ludlum induced investors, including his advisory clients to whom he owed a fiduciary duty, to buy securities by promising superior rates of return, but failed to disclose that the Printz Entities earned little revenue and were unable to cover their expenses out of earnings. The Printz Entities failed to register their securities offerings with the SEC, even though no exemption from registration applied, and Printz Capital violated multiple provisions governing registered investment advisers.

Please click here to access the administrative action.


Categories

Enforcement Actions, Investment Advisers