Securities Fraud: Massachusetts Hedge Fund Manager Sentenced to 30 Months for Bilking Investors, Northeast Securities Ordered to Pay Customer $1.8M, and Ex-State Street Executive Pleads Guilty in Scheme Involving Secret Commissions

After Pleading Guilty, Massachusetts Money Manager Must Repay Investors
Stephen Eubanks is sentenced to 30 months behind bars for bilking investors of $437K. He also must pay restitution in that amount to his more than 20 victims.

Eubanks presented himself as a hedge fund manager at Eubiquity Capital, which he founded. He raised over $700K from investors and claimed that he was running a hedge fund that had ties with UBS (UBS), TD Ameritrade (AMTD), Fidelity, and Goldman Sachs (GS).

While Eubanks invested some of the clients’ funds for them he also spent a healthy amount of their money on his own spending. Eubanks also is accused of on occasion operating his fund as if it were a Ponzi scam.

Previously, he was a registered representative with a number of big broker-dealers, including Smith Barney, UBS (UBS), Bear Stearns, and Oppenheimer Co. (OPY). He was fired following a number of customer complaints and because of disciplinary matters.

Eubanks pleaded guilty to wire fraud earlier this year. His victims included acquaintances, friends, and neighbors.

FINRA Orders Northeast Securities to Pay Compensatory Damages to Ex-Customer
A Financial Industry Regulatory Authority Panel has decided that Northeast Securities must pay former customer Timothy McLaughlin $1.76M in compensatory damages and $33,840 for his witness and legal fees in his securities arbitration case against the firm. Northeast Securities also has to pay him 9% annual interest on the award beginning from March 1, 2012 until it is fully paid.

In his corporate bond fraud case, McLaughlin accused the firm and three of its brokers of misrepresentation, churning, common law fraud, breach of fiduciary duty, gross negligence, negligence, failure to supervise, negligent misrepresentation, and committing violations of Securities and Exchange Commission and FINRA rules.

Ex-State Street Corp Executive Reaches Plea Deal With US Prosecutors
Richard Boomgaardt, an ex-State Street Corp. (STT) executive, has pleaded guilty to securities fraud and wire fraud. Boomgaardt was charged by US prosecutors in a scheme involving secret commissions on billions of dollars of equity and fixed-income trades in which six investors were defrauded.

Boomgaardt used to head up State Street’s management desk for Europe, the Middle East, and Africa. It was just two weeks ago that Edward Pennings, an ex-State Street senior managing director, pleaded guilty to conspiracy related to the same fraud. A third man, ex-State Street vice president Ross McLellan, has pleaded not guilty to the criminal charges against him.

In 2014, State Street settled with the Financial Conduct Authority in the UK related to the mark-ups charged to these same six clients. The firm paid the regulator a $38M fine. In January, the Boston-based bank settled related civil and criminal charges in the US over its probe into the same matter for $64.6M.

At Shepherd Smith Edwards and Kantas, LTD LLP, we are here to help investors try tor recoup their securities fraud losses. Our securities lawyers work with investors throughout the US and with investors with claims against financial firms and representatives based in this country. Contact us today.

Second ex-State Street executive admits guilt in U.S. fraud case, Reuters, July 12, 2017

Northeast Securities to pay $1.8 million in Finra arbitration claim, InvestmentNews, July 11, 2017