SEC Brings Suit Against Unregistered Broker Dealer

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SEC Brings Suit Against Unregistered Broker Dealer

On May 15, the SEC filed a complaint against Behrooz Sarafraz in California federal court, alleging that Sarafraz violated federal securities laws by acting as an unregistered broker dealer, selling stock without a license. The SEC alleges that between February 2002 and April 2010 Sarafraz engaged in the offer and sale of oil and gas securities by TVC Opus I Drilling Program, LP and its managing partner, Tri-Valley Corporation. The SEC further alleged that Sarafraz described the investment program to potential investors and recommended that they purchase securities. Sarafraz is believed to have received about $18.3 million in commissions.  He allegedly paid about $1.9 million to others as referral fees and kept the remaining $16.4 million for himself. Sarafraz’s commissions ranged from seven to seventeen percent of the sale proceeds.

The SEC stated that “[b]y failing to become associated with a registered broker-dealer, Sarafraz denied investors the protections of regulatory oversight and firm supervision.” The SEC argued that Sarafraz’s actions violate Section 15(a) of the Securities Exchange Act of 1934 and sought an order requiring Sarafraz to disgorge illicit gains and pay a civil penalty and additionally sought an injunction against further violations. Sarafraz has agreed to settle the case without either admitting or denying the allegations by paying more than $22.4 million in disgorgement plus interest with a civil penalty and by consenting to an injunction. The SEC awaits approval of the settlement agreement by the US District Court for the Northern District of California.

If you or someone you know has lost money as a result of an investment, please contact Richard Frankowski at 888-741-7503 to discuss your potential legal remedies.

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