Malachi Financial Products is Accused of Defrauding The City of Rolling Fork, Mississippi

In its complaint, the US Securities and Exchange Commission has submitted a civil junctive action accusing Malachi Financial Products, Inc. and its principal Porter B. Bingham, of municipal bank fraud targeting Rolling Fork, Mississippi. According to the regulator, Malachi and Bingham charged the city too much for municipal advisory services involving a muni bond offering from October 2015.

Rolling Fork had hired Malachi in the capacity of municipal adviser in 2015 because of a proposed bond offering to pay for a number of improvement projects in the city. The SEC contends that after the closing of the offering, the firm and its principal submitted two invoices to the bond trustee, one—for $33,000—was for services that were never rendered and had never been authorized by the Mississippi city. The other, for $22K, was in line with what Malachi and Rolling Fork had agreed upon.

Bingham purportedly did not disclose to Rolling Fork that he had received $2,500 from Anthony Stovall, who worked for Bonwick Capital Partners. LLC, prior to Malachi recommending to the city that it retain Stovall’s firm as an underwriter for the bond offering. Rolling Fork went on to hire the underwriting firm because of the recommendation.

Now, the Commission wants injunctions, penalties, disgorgement, prejudgment interest, and other relief.

These are not the first violations of which Bingham is accused. In 2017, FINRA suspended him as a general securities principal and ordered him to pay $10K for net capital violations involving The Malachi Group. That firm has been sanctioned numerous times for different compliance matters and the National Association of Securities Dealers—now FINRA—expelled it in 2006 for not paying fines.

Meantime, the SEC’s administrative order in its case against Stovall is resolved. He reportedly has worked with Bingham on numerous muni bond offerings since 2014 and gave him what the regulator called “improper gifts.” These purported gifts were not disclosed to Rolling Fork’s Board of Alderman.

For allegedly violating MSRB rules, Stovall is suspended from associating with industry members and taking part in penny stock offerings. He also must pay a $20K civil penalty.

Institutional Investor Fraud
Municipalities, too, can become the victim of securities fraud. At The SSEK Partners Group, we represent institutional clients that have sustained losses due to investment fraud. Contact our institutional investor fraud law firm today.

Read the SEC Complaint in the Malachi Financial Case (PDF)

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