The U.S. District Court for the Southern District of Indiana entered a final judgment against Tamara Steele and her Indianapolis-based investment advisory firm Steele Financial Inc. In a separate administrative proceeding, the SEC also barred Steele from the securities industry.
The SEC’s complaint alleged that, between December 2012 and October 2016, Steele Financial and Steele sold to advisory clients and other investors more than $15 million of the securities of Behavioral Recognition Systems Inc. (BRS), a private company the SEC previously charged with fraud.
The SEC claimed that Steele and Steele Financial targeted their own advisory clients, selling approximately $13 million of BRS securities to more than 120 clients, without disclosing that they were receiving commissions from the company ranging from 8 to 18 percent. The complaint further alleged that Steele and Steele Financial created false invoices and took other steps to conceal their involvement selling BRS securities.
Steele was affiliated with brokerage firm Comprehensive Asset Management and Servicing Inc. for eight years. The SEC said that she concealed her sales efforts on behalf of BRS from her clients and from the broker-dealer.
For example, the complaint alleged that Steele submitted false documents – including letters, invoices, and consulting agreements – to BRS claiming that her husband had provided the services, instead of her, falsely attested to the broker-dealer that she had not engaged in any securities transactions “away from the firm,” and “secretly” purchased BRS securities from a client using a nominee entity.
The final judgment permanently enjoins Steele and Steele Financial from violating the antifraud provisions of various federal securities laws.
In addition, the final judgment orders Steele to disgorge $845,760, which will be deemed satisfied by her return of 1,358,160 shares of BRS common stock to BRS’s Bankruptcy Trustee, and to pay a $75,000 civil penalty. Steele also agreed to cease operations and terminate Steele Financial within 90 days of the entry of the final judgment.
In a related administrative proceeding, the SEC issued an order permanently barring Steele from the securities industry. She consented to the district court’s and the SEC’s orders without admitting or denying the allegations.