New York-based investment advisory firm ICP Asset Management and its founder and president Thomas C. Priore have agreed to settle the Securities and Exchange Commission’s charges that they defrauded several collateralised debt obligations (CDOs) they managed.
ICP, Priore, and related entities have agreed to pay more than USD23m to settle the case the SEC filed against them in June 2010 in federal court in Manhattan.
The SEC alleged they engaged in fraudulent practices and misrepresentations that caused the CDOs to overpay for securities and lose millions of dollars. Priore and the ICP companies also improperly obtained fees and undisclosed profits at the expense of the CDOs and their investors.
“The settlement with Priore and ICP sends a clear message that investment advisers must always act in the best interests of their advisory clients, even if those clients are sophisticated investors,” says George S. Canellos, deputy director of the SEC’s division of enforcement. “When advisers put their own interests ahead of their clients’ interests, the SEC will seek to hold them accountable.”
The court approved the settlement terms on 6 September. The final judgment orders Priore to pay disgorgement of USD797,337, prejudgment interest of USD215,045, and a penalty of USD487,618.
ICP and its holding company Institutional Credit Partners are required, on a joint and several basis, to pay disgorgement of USD13,916,005 and prejudgment interest of USD3,709,028. ICP also must pay a penalty of USD650,000.
An affiliated broker-dealer ICP Securities is ordered to pay disgorgement of USD1,637,581, prejudgment interest of USD301,893, and a penalty of USD1,939,474.
Priore also agreed to settle an administrative proceeding against him and be barred from association with any broker, dealer, investment adviser, municipal securities dealer, or transfer agent, and from participating in any offering of a penny stock. He has a right to reapply for association or participation after a period of five years.
Priore and the ICP companies also consented, without admitting or denying the SEC’s allegations, to permanent injunctions enjoining them from future violations of the securities laws that they were alleged to have violated.