U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23845 / May 25, 2017
Securities and Exchange Commission v. William J. Wells and Promitor Capital Management LLC, No. 17 Civ. 7738 (AJN) (S.D.N.Y.)
Commission Obtains Judgment Against and Imposes Industry Bar on New Jersey Resident for Securities Fraud
The United States Securities and Exchange Commission today announced that on May 17, 2017, the Honorable Alison Nathan, United States District Court Judge for the Southern District of New York, entered a judgment, on the consents of William J. Wells and Promitor Capital Management LLC, permanently enjoining them from violating the anti-fraud provisions of the federal securities laws and ordering them to jointly and severally pay $660,427.62 in disgorgement. The SEC also announced that, on May 18, 2017, it issued an industry and a penny stock bar against Wells.
The SEC’s complaint, filed on October 1, 2015, alleged that Wells falsely told some investors that he was a registered investment adviser and would invest their money in specific stocks. Instead, Wells and his firm, Promitor, are alleged to have invested mainly in high-risk options with poor results that Wells concealed with phony investor account statements that grossly inflated performance. Wells further attempted to hide the losses by using funds from new investors to make Ponzi-like payments to earlier investors, the complaint alleges. Wells allegedly raised more than $1.1 million from dozens of investors from at least September 2009 to September 2015, but by late summer 2015, the Promitor fund brokerage accounts held less than $35, with the rest dissipated by trading losses and Ponzi-like payments, or diverted into Wells’s personal bank account.
Wells and Promitor consented to a judgment that: (a) permanently enjoins them from violating Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1), (2), and (4) of the Investment Advisers Act of 1940 and Rule 206(4)-8 thereunder; and (b) orders them to disgorge $660,427.62, which is deemed satisfied by the over $1.5 million in forfeiture and restitution orders previously entered against Wells in his parallel criminal action, United States v. Wells, No. 15 Cr. 885 (S.D.N.Y.). On April 4, 2016, Wells pleaded guilty to securities fraud and wire fraud in the criminal action, and on September 7, 2016, Wells was sentenced to 46 months in prison.
Separately, the SEC instituted settled administrative proceedings against Wells, based on Wells’s criminal conviction, pursuant to which Wells, without admitting or denying the SEC’s findings, agreed to be barred from the securities industry and, additionally, agreed to be barred from participating in any offering of a penny stock, including: acting as a promoter, finder, consultant, agent or other person who engages in activities with a broker, dealer or issuer for purposes of the issuance or trading in any penny stock, or inducing or attempting to induce the purchase or sale of any penny stock.
The SEC’s investigation was conducted by Hane L. Kim, Jennifer K. Vakiener, Sandra Yanez, and Steven G. Rawlings of the New York Office. The SEC’s litigation against Wells and Promitor was led by Jack Kaufman, Ms. Kim, and Ms. Vakiener. The case was supervised by Sanjay Wadhwa. The SEC appreciates the assistance of the U.S. Attorney’s Office for the Southern District of New York and the Federal Bureau of Investigation.