SEC v. Thomas Alberto Clarke Bethancourt et al, Case No. 13-cv-3074 (S.D.N.Y).  On May 6, 2013, the SEC announced it filed fraud charges against Tomas Alberto Clarke Bethancourt, Iuri Rodolfo Bethancourt, Jose Alejandro Hurtado, and Haydee Leticia Pabon.  The SEC alleges that brokers at Direct Access Partners (“DAP”) executed fixed income trades for customers in foreign sovereign debt.  Banco de Desarrollo Económico y Social de Venezuela (“BANDES”) was a new customer who came to DAP through connections to Hurtado.  Through kickbacks to BANDES’ VP of Finance, María de los Ángeles González de Hernandez, DAP was able to obtain BANDES’ trading business.  Because of the kickbacks, Gonzalez entered into trades with DAP at substantial markups or markdowns without concern about the prices paid by BANDES.  The traders deceived DAP’s clearing brokers, executed internal wash trades, inter-positioned another broker-dealer in the trades to hide their conduct, and engaged in roundtrip trades to pad their revenue.  As a result, DAP generated more than $66 million in revenue from transaction fees.

According to the SEC, Tomas Alberto Clarke Bethancourt was responsible for executing fraudulent trades and maintaining spreadsheets tracking the markups and markdowns.  Iuri Rodolfo Bethancourt received more than $20 million in fraudulent proceeds from DAP.  He paid Gonzalez a portion of this amount in kickbacks.  Jose Alejandro Hurtado was the go-between for DAP and Gonzalez.  Hurtado received more than $6 million in kickbacks some of which he then paid to Gonzalez.  Pabon, who is Hurtado’s wife, received $8 million in markups or markdowns on BANDES trades that were sent to her disguised as finders’ fees.  Defendants are charged with violating Sections 17(a)(1) and (a)(3) of the Securities Act; Section 10(b) of the Exchange Act and Exchange act Rules 10b-5(a) and (c); aiding and abetting violations of  Section 10(b) of the Exchange Act and Exchange Act Rules 10b-5(a) and (c); and aiding and abetting violations of Section 15(c)(1)(A) of the Exchange Act and Exchange Act Rule 10b-3.  The SEC seeks injunctive relief, civil monetary penalties and disgorgement.  In a parallel action, the U.S. Attorney’s Office for the Southern District of New York announced criminal charges against Gonzalez as well as Clarke and Hurtado.