Hedge fund manager George R. Jarkesy Jr. filed suit against the Securities and Exchange Commission on Wednesday, charging that the agency denied him his rights of due process in a fraud case involving his former associate, notorious Wall Street broker Anastasios “Tommy” Belesis.
Mr. Jarkesy, a popular conservative radio show host in Houston, seeks to prevent the SEC from moving forward with an administrative proceeding scheduled for Feb. 3, saying it will violate his constitutional rights.
The SEC charges Mr. Jarkesy and his firm, Patriot28, formerly known as John Thomas Capital Management, with securities law violations, and seeks to have him barred for life from serving as a securities industry officer and director. It also seeks $100 million in punitive civil penalties, according to the suit filed in U.S. District Court for the District of Columbia.
On Dec. 5, the SEC barred Mr. Belesis from the brokerage business, charging him with negligent activity.
The agency said his firm, the now-defunct Wall Street brokerage John Thomas Financial Inc., placed customers in two John Thomas Financial hedge funds even though the funds' adviser and manager fraudulently elevated the firm's interests over those of the funds'. In barring Mr. Belesis, the SEC also charged him with influencing the hedge funds' manager, Mr. Jarkesy, and its adviser, John Thomas Capital Management, forcing them to breach their fiduciary duty.
Although Mr. Jarkesy wasn't named in the SEC's settlement order, he was named in the SEC's original administrative order of March 22, 2013.
“Among the most egregious of the SEC's violations is its clear prejudgment of the administrative proceeding, memorialized in a commission order — issued and published prior to the hearing on the merits of the case — containing pages of factual findings against plaintiffs and a formal legal finding that they are liable for securities fraud,” Mr. Jarkesy's complaint charges.
A representative of the SEC declined to comment on the case.