The Securities and Exchange Commission has obtained final judgments in a previously filed case against Thomas D. Renison and Timothy J. Allcott, whom the agency charged with making false statements to current and prospective retail investors about the performance of the investment firm they controlled, ARO Equity LLC, and with using investor funds to pay interest to other investors.
As The DI Wire previously reported, the Massachusetts Securities Division previously charged Renison and Allcott for the same issue.
Among other things, the judgments order the defendants to pay a total of $12.3 million with that amount deemed satisfied by orders of forfeiture and restitution in parallel criminal actions.
According to the SEC’s complaint filed in January 2020, in July 2014, Renison, a Connecticut resident, was barred by the SEC from, among other things, associating with any investment adviser or broker-dealer. Nevertheless, the complaint alleges that, from at least July 2015 through June 2018, Renison violated this bar when he, along with Allcott, a Massachusetts resident, formed ARO Equity as an investment adviser firm and raised approximately $6 million from at least 15 investors.
The SEC’s complaint alleges that Renison and Allcott falsely touted ARO Equity’s success to encourage potential investors to cash out of their retirement products and invest with them in ARO Equity. The complaint also alleges that soon after the defendants launched the firm, ARO Equity’s investments began to fail. Rather than inform their clients of the losses, Renison and Allcott continued to falsely promote ARO Equity’s success and the security of investing with them.
Among other false statements, Renison and Allcott allegedly told investors that ARO Equity had double-digit returns, that there was no downside to investing with the firm, and that the investors’ money was as safe as being in a bank.
In reality, the SEC says ARO Equity had experienced significant losses and had to use new investor funds to pay interest to older investors.
Allcott and Renison were also charged criminally for their alleged conduct in parallel criminal proceedings on June 8, 2020. Allcott entered a guilty plea in his criminal case on July 27, 2020, and was sentenced on May 8, 2023. Renison entered a guilty plea in his criminal case on October 6, 2020, and was sentenced on May 8, 2023. Allcott received a sentence of 30 months incarceration and was ordered to pay restitution of $6.1 million. Renison received a sentence of 48 months incarceration and was ordered to pay restitution of 6.2 million.
Allcott and Renision consented to final judgments, which was entered on July 27, 2023, by the U.S. District Court for the District of Massachusetts. The judgment permanently enjoins Allcott and Renison from violating SEC rules. The judgment also permanently enjoins them from, participating in the issuance, purchase, offer, or sale of any security. Renison was separately enjoined from violating SEC rules to comply with the investment adviser and broker dealer bars reflected in the final administrative order that the Commission entered against him on July 3, 2014.
The final judgments also order Allcott and Renison to pay disgorgement plus prejudgment interest of $6.1 million and $6.2 million respectively, with those amounts deemed satisfied by “the forfeiture and restitution ordered in the parallel criminal cases.”
Because the defendants were sentenced to prison sentences, the Commission says it did not ask the court to impose civil monetary penalties against them.
The action against defendant ARO Equity remains pending.