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Fox Raids Henhouse: SEC Charges Compliance Director With Fraud

In what was described as a case of the “fox guarding the henhouse,” the SEC has announced fraud charges against a man who allegedly abused his position as compliance director to cover up an investment scheme.

The SEC’s Enforcement Division alleges that William Quigley was involved in a scheme to solicit investors to buy stock in well-known companies or supposed start-ups on the verge of going public, but the securities were never actually purchased for them. Instead, once investors wired their funds to bank and brokerage accounts that Quigley set up and controlled, the money was quickly wired to a bank account in the Philippines or withdrawn in small increments from ATM machines in the vicinity of Quigley’s home and office.

Quigley allegedly worked in concert with two brothers who live in the Philippines and handled the solicitation aspects of the scheme while he funneled investor money out of the accounts to his brothers and himself.

The SEC alleges that Quigley opened three brokerage accounts to misappropriate investor funds, including a secret account at his then-employer Trident Partners Ltd. Although it was Quigley’s job as compliance director to open and properly route all incoming mail as well as to monitor all wires and report any suspicious transfers, the SEC said he abused his position to keep Trident Partners from learning about the secret account and its corresponding wires, and he stole commission checks to Trident Partners and deposited them in outside accounts he used in the scheme.

“We allege a classic situation of the fox guarding the henhouse as William Quigley subverted his position of trust as compliance director and stole money from investors and his own firm,” said Andrew M. Calamari, Director of the SEC’s New York Regional Office.

The matter will be scheduled for a public hearing before an administrative law judge for proceedings to adjudicate the Enforcement Division’s allegations and determine what, if any, remedial actions are appropriate.

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