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SEC LITIGATION RELEASE
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EXTRACTED KEY WORDS
COURT COMMISSION INVESTORS KEYSTONE GRIGGS SECURITIES DETERMINATION HIGH YIELD BONDS ACT EXCHANGE TED HAROLD WESTERFIELD DISTRICT VIOLATING KICKBACK SCHEME PURCHASE SALE FUNDS EXECUTION DISGORGEMENT THEREUNDER PAY RESTITUTION AMOUNT ACCORDING SCHEDULE CIVIL ACTION OFFSET DISGORGEMENT LIABILITY |
U.S. Securities and Exchange Commission
LITIGATION RELEASE NO. 15376 \ May 29, 1997
SEC v. Ted Harold Westerfield, 94 Civ. 6997 (JSM), U.S. District
Court,
Southern District of New York
The Commission today announced that on May 23, 1997, the
Honorable
John S. Martin, U.S.D.J. issued an opinion and order granting the
Commission s motion for summary judgment against Defendant Ted Harold
Westerfield. The Court determined that Westerfield violated
antifraud
provisions of the securities laws by engaging in a commission
kickback
scheme. Westerfield, a broker with Gruntal & Co., agreed to kick back
a
portion of commissions he earned on the purchase and sale of high
yield
bonds ordered by Albert Griggs, Jr., a bond analyst and assistant
portfolio
manager with Keystone Custodian Funds, Inc.
The Commission had charged that the scheme defrauded both Keystone
and
its mutual fund investors, because its purpose was to enrich
Westerfield
and Griggs rather than obtain best execution of transactions for the
Keystone investors. Keystone investors also were defrauded in that
they
were not informed that Keystone, in exercising its investment
advisory
function, had agreed to execute purchases and sales of high yield bonds
for
Keystone's account through Westerfield, pursuant to his undisclosed
kickback arrangement with Griggs.
The Court held Westerfield liable for disgorgement of $210,931,
representing commissions he received as a result of his agreement
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