SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 16911 / February 28, 2001
UNITED STATES OF AMERICA V. REGALD B. SMITH Case Number 7 00-cr-51
(E.D. Ky.) (Hood, J.)
SECURITIES AND EXCHANGE COMMISSION v. REGALD B. SMITH, Civil Action
No. 7 00 cv 358 (E.D. Ky.) (Hood, J.)
The Securities and Exchange Commission ("Commission") announced that
on February 12, 2001, the Honorable Joseph M. Hood of the U.S.
District Court for the Eastern District of Kentucky sentenced former
Stifel, Nicolaus & Company, Incorporated ("Stifel") registered
representative Regald B.Smith ("Smith") to 24 months in prison,
followed by 5 years probation and ordered him to pay restitution of
$4,759,319.00. The sentencing follows Smith's October 10, 2000 guilty
plea to a single count of wire fraud pursuant toa plea agreement.
On September 7, 2000, in the Commission's action, , 7 00 cv 358 (E.D.
Ky.), Judge Hood entered an order of permanent injunction against
Smith of Pikeville, Kentucky pursuant to Smith's consent, without
admitting or denying the Commission's charges, enjoining Smith from
violating the antifraud provisions of the federal securities laws,
freezing Smith's assets, ordering him to account for and disgorge his
ill-gotten gains and pay civil penalties in amounts to be determined,
provide the Commission with expedited discovery and prohibiting the
destruction of documents.
The Commission filed suit against Smith a day earlier seeking
emergency relief in the form of a Temporary Restraining Order and
asset freeze, among other things. In its complaint, the Commission
accused Smith, a registered representative in Stifel's Pikeville,
Kentucky office, of perpetrating an 18-month scheme to defraud in
which he misappropriated more than $5 million from at least 6
investors who were his brokerage clients. On August 28, 2000, Smith
confessed to senior Stifel officials that he had conducted the scheme
by conning clients into purchasing fictitious bonds, then diverting to
his personal use the funds they gave him to invest.
The Commission alleged that Smith, age 55, was, employed by Stifel as
the Investment Executive in charge of the Firm's Pikeville, Kentucky
office. Smith stole his clients' funds by luring them into believing
he had a "special situation" he could offer them. He told them that
other Stifel clients were interested, for one reason or another, in
selling short-term bonds from their portfolio. The bonds were
particularly attractive not only because they were short-term, but
also because they were tax-free and promised high yields. After his
SNIPPETS:
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION v. REGALD B. SMITH, Civil Action No. 7 00 cv 358 (Hood, J.)
On September 7, 2000, in the Commission's action,, 7 00 cv 358, Judge Hood entered an order
expedited discovery and prohibiting the destruction of documents.
The Commission filed suit against Smith a day earlier seeking emergency relief in the form of
In its complaint, the Commission accused Smith, a registered representative in Stifel's
On August 28, 2000, Smith confessed to senior Stifel officials that he had conducted the
The bonds were particularly attractive not only because they were short-term, but also
After his victims gave him money to purchase the bonds, Smith simply diverted their funds to
To conceal his deceit, Smith told at least one of his victims at or about the time the first
Smith also admitted that he tried to cover-up his scheme by, among other things, attempting
The Commission's complaint charged that Smith's scheme violated the antifraud provisions of
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