The United States District Court for the Eastern District of Pennsylvania has entered a judgment against Defendant Alfred Clay Ludlum, III in the matter captioned Securities and Exchange Commission v. Alfred Clay Ludlum, III, et al., Civil Action No.10-cv-7379 (E.D. Pa.).
Ludlum is the founder, president, chief compliance officer, and sole individual in control of Printz Capital Management, LLC (Printz Capital), which was registered with the Commission as an investment adviser from September 19, 2006 until its registration was revoked on June 27, 2011. Ludlum also wholly controls Printz Financial Group, Inc. and PCM Global Holdings LLC (together with Printz Capital, the Printz Entities).
In a civil action filed on December 20, 2010, the Commission alleged that Ludlum and the Printz Entities made fraudulent misrepresentations and material omissions to investors, including Printz Capital advisory clients, concerning unregistered offerings of equity and debt securities in the Printz Entities. These investors were told that their funds would be used for working capital and to grow and operate the businesses of the Printz Entities when, in fact, Ludlum used most of these funds to support lifestyle, pay his personal expenses, and repay other investors. The Commission also alleged that Ludlum fraudulently obtained loans from one advisory client and made unauthorized transfers of funds belonging to three advisory clients to accounts that he controlled. The complaint further alleged that Ludlum failed to register the securities offerings in the Printz Entities with the Commission, even though no exemption from registration applied, and that Printz Capital, aided and abetted by Ludlum, violated additional provisions governing investment advisers.
To settle the SEC’s charges, Ludlum, without admitting or denying the allegations of the complaint, except as to jurisdiction, consented to the entry of a judgment that: (i) permanently enjoins him from violating Sections 5 and 17(a) of the Securities Act of 1933 (the Securities Act), Section 10(b) of the Securities Exchange Act of 1934 (the Exchange Act) and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of Investment Advisers Act of 1940 (the Advisers Act), and from aiding and abetting any violations of Sections 203, 204, and 207 of the Advisers Act; and (ii) provides that Ludlum will be ordered to pay disgorgement, prejudgment interest, and penalties in amounts to be determined by the court, upon motion by the Commission.
Based on the entry of these injunctions, on September 29, 2011 the SEC issued an Order Instituting Administrative Proceedings Pursuant to Section 203(f) of the Investment Advisers Act of 1940 and Notice of Hearing against Ludlum.
Previously in this matter, a final judgment was entered by default against the Printz Entities on March 15, 2011,, which permanently enjoined them from violating Sections 5 and 17(a) of the Securities Act, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, permanently enjoined Printz Capital from violating Sections 206(1), 206(2), 203A, 204, and 207 of the Advisers Act, and permanently enjoined Printz Financial Group, Inc. from violating Securities Act Rule 503(a) of Regulation D. Pursuant to the final judgment, the Printz Entities were ordered to pay, jointly and severally, USD735,617 in disgorgement, USD49,817 in prejudgment interest, and a civil penalty of USD735,617. No part of this judgment has been paid to date. The Commission subsequently instituted administrative proceedings against Printz Capital pursuant to Section 203(e) of the Advisers Act, and Printz Capital consented to the issuance of an order on June 27, 2011 revoking its registration with the Commission as an investment adviser.
