The Securities and Exchange Commission on Thursday barred Anastasios “Tommy” Belesis, former chief executive of the shuttered John Thomas Financial Inc., from the brokerage business.
Charging Mr. Belesis with negligent activity, the SEC charged that his firm placed customers in two John Thomas hedge funds, and the funds' adviser and manager fraudulently elevated the firm's interests over those of the funds.
The SEC also charged him with influencing the funds' manager and adviser, forcing them to breach their fiduciary duty.
The manager's allegiance to his firm thus deprived the funds “of a material amount of money, directly or indirectly, for placement fees, loans to small companies that then used the money to pay fees to JTF, and for unearned bridge loan fees JTF received for performing little or no services,” the SEC said in its cease-and-desist order.
In April, the Financial Industry Regulatory Authority Inc. filed a complaint against JTF alleging Mr. Belesis bullied brokers and lied to senior staff as part of a fraudulent plan to profit from a penny stock. JTF was known for its culture of intimidation, in which brokers were expected to spend hours cold-calling potential customers.
The SEC has ordered Mr. Belesis to pay disgorgement of $311,948, prejudgment interest of $88,052 and a civil penalty of $100,000.
Further, he is now barred from association with any broker, dealer or investment adviser and prohibited from serving as an adviser, employee, officer, director or advisory board member for any registered investment company. Mr. Belesis also is barred from participating in any penny stock offerings.
However, he has the right to apply for re-entry to the brokerage business after one year.
Mr. Belesis' lawyer, Ira Sorkin, said Mr. Belesis neither admitted nor denied the allegations.
“There is no reference in the order that he engaged in fraudulent conduct. The fraudulent behavior was attributed to the manager of the fund, who was not named,” Mr. Sorkin said.
Although the hedge funds' manager, George R. Jarkesy Jr., was not named in the settlement order on Thursday, he was named in the SEC's original administrative order of March 22. The regulator found that Mr. Jarkesy Jr. worked closely with Mr. Belesis to launch the two funds that raised $30 million from investors. As part of the scheme, the SEC said, Mr. Jarkesy led investors to believe that he was solely responsible for investment decisions.
In April, John Thomas Financial filed termination requestswith Finra, ending its registration as a securities broker-dealer.