An unregistered adviser in Texas admitted to selling close to $400,000 in investments and promissory notes even though state regulators had ordered him to stop flogging unregistered securities.
In a confession last month, William Erik Byrne acknowledged to local authorities that he had committed securities fraud. In a suit filed against Mr. Byrne in the 117th District Court in Nueces County, Texas, the state claimed that the adviser had hawked $389,000 in investment contracts and promissory notes between 2006 and 2009 — this despite a 2005 order from the Texas State Securities Board to
cease and desist from selling unregistered securities and acting as an unregistered investment adviser.
Securities regulators in Texas first went after Mr. Byrne in 2005 after he sold unregistered variable annuities from Hampton Insurance Co. Ltd. The VAs weren't filed with the state insurance department and were not registered with securities regulators. Moreover, carrier Hampton Insurance was not subject to the supervision of the Texas Department of Insurance, according to the order.
In his latest run-in with regulators, Mr. Byrne also was accused by the state of selling promissory notes that weren't registered, and providing investment advice to customers — even though he is not a registered investment adviser. In addition to being slapped with a cease-and-desist order from Texas' Securities Department, he was also ordered to pay a $10,000 penalty to the state Insurance Department for engaging in the unauthorized business of insurance in 2008.
Mr. Byrne admitted that he sold investments to customers from 2006 to 2009 without letting them know about his previous dealings with state regulators. Officials in Texas said he also didn't tell current clients that investors in his earlier investment programs didn't receive payments in accordance with the terms of their contracts.
A date has not yet been set for Mr. Byrne's upcoming arraignment. He will enter a formal plea at that time.
A call to Mr. Byrne's attorney, Kim Cox, was not immediately returned.
