Ex-John Thomas hedge fund manager loses bid to toss SEC case

George Jarkesy Jr. must face charges of steering bloated fees to the John Thomas Financial brokerage

Jun 11, 2014 @ 10:58 am

Houston hedge-fund manager George Jarkesy Jr. must face a Securities and Exchange Commission case in which he was accused of steering bloated fees to the John Thomas Financial Inc. brokerage.

Mr. Jarkesy lost a bid to throw out the case, an administrative proceeding in which he is accused of defrauding investors.

Mr. Jarkesy and his investment fund management group Patriot28, formerly known as John Thomas Capital Management, argued that they can't get a fair hearing before the SEC. Mr. Jarkesy said the agency has prejudged him as a result of findings in a settlement with John Thomas Financial's founder, Anastasios (Tommy) Belesis.

U.S. District Judge Beryl Howell in Washington ruled that Mr. Jarkesy has to pursue his claims through an established process that includes hearings before an administrative law judge, SEC commissioners and, finally, a court of appeals.

“To the extent that the plaintiffs believe their cause has been prejudged by the SEC commissioners, they may seek review, if necessary, before the court of appeals, but the statute leaves no room for this court to provide them the relief they seek,” Ms. Howell wrote.

Mark Bierbower, an attorney for Mr. Jarkesy, didn't immediately respond to a phone message yesterday seeking comment on the ruling.

The SEC brought claims against Mr. Jarkesy and Mr. Belesis in March 2013, saying they had defrauded hedge fund investors. Mr. Belesis settled the allegations against him in December by agreeing to be banned from the securities industry. The deal gave him the option of applying for reinstatement after a year.

Mr. Belesis and John Thomas Financial were each ordered to pay $500,000.

Mr. Jarkesy, a frequent media commentator and talk show host, led investors to believe that as manager of the funds he was solely responsible for all investment decisions, the SEC said in a statement in March 2013.

Mr. Belesis, in fact, sometimes replaced Mr. Jarkesy in running the funds and funneled money from them to a company he had an interest in, while also “bullying” Mr. Jarkesy into paying substantial, unjustified fees to John Thomas Financial, the SEC said.

The case is Jarkesy v. U.S. Securities and Exchange Commission, 14-cv-114, U.S. District Court, District of Columbia, (Washington).

(Bloomberg News)

0
Comments

What do you think?

View comments

Recommended for you

Featured video

Events

Why does social media matter for financial advisers?

Social media is a reflection of who you are. But who are you as a financial adviser? Debra Bednar Clark of DB & Co. offers some solutions to enhance your practice.

Video Spotlight

Help Clients Be Prepared, Not Surprised

Sponsored by Prudential

Recommended Video

Path to growth

Latest news & opinion

Brace for steepest rate hikes since 2006 in new year

Citigroup, JPMorgan Chase predict average interest rates across advanced economies will climb to at least 1 percent in 2018.

Why private equity wants a piece of the RIA market

Several factors, including consolidation in the independent advice industry and PE's own growing mountain of cash, are fueling the zeal to invest.

Finra bars former UBS rep for private securities transactions

Regulator says Kenneth Tyrrell engaged in undisclosed trades worth $13 million.

Stripped of fat commissions, nontraded REIT sales tank

The "income, diversify and interest rate" pitch was never the main draw for brokers.

Morgan Stanley fires former Congressman Harold Ford for misconduct

Allegations against the wirehouse's former managing director include sexual harassment, which Ford denies.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print