SEC v. James S. Quay and Jeffrey A. Quay, Case No. 1:12-cv-03429-RWS (N.D. Ga.).  On October 4, 2012, the SEC announced fraud charges against James and Jeffrey Quay.  James Quay (“Quay”) and his brother stole $560,000 from two women who believed they were investing in a covered-call equities trading program.  They Quays created a fake partnership to operate the program.  However, the partnership was never formed as a valid legal entity.  The Quays deposited the investors’ money in a brokerage-firm account and spent at least $180,000 to pay mortgages, restaurant bills and other personal expenses.  Quay did not tell the two women that he was a convicted felon and a disbarred lawyer.  Quay also did not tell the women that he was a sales agent and recruiter for a Ponzi scheme prosecuted by the SEC and another scheme involving a covered-call trading program.

Quay settled with the SEC, without admitting or denying the charges, by agreeing to the entry of a final judgment enjoining him from violating Sections 5(a), 5(c) and 17(a) of the Securities Act and Sections 10(b) and 15(a) of the Exchange Act and Rule 10b-5 thereunder.  Quay also agreed to pay $1,403,638.62 in disgorgement plus prejudgment interest of $179,118.78 and a civil monetary penalty of $450,000.  Quay will be permanently barred from association with any broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization.  He also agreed to a penny stock bar and to be barred from appearing or practicing before the SEC as an attorney or an accountant.