On March 11, 2013, the SEC charged New York-based private equity firm Ranieri Partners, one of its former senior executives, and an unregistered broker with securities law violations for illegally soliciting more than $500 million in capital commitments for funds managed by the firm.
William M. Stephens was the unregistered broker. Donald W. Phillips was the former senior executive that headed up capital raising efforts for Ranieri Partners and was responsible for overseeing Stephen’s activities.
Federal securities laws require that an individual who solicits investments in return for transaction-based compensation be registered as a broker. The SEC’s investigation found that Stephens solicited investors for Ranieri Partners but was not a registered broker.
Ranieri Partners, Phillips, and Stephens agreed to settle the SEC’s charges. Ranieri Partners agreed to pay a penalty of $375,000, Phillips agreed to pay a penalty of $75,000, and Stephens agreed to be barred from the securities industry.
Merri Jo Gillette, Director of the SEC’s Chicago Regional Office said “registered brokers are subject to SEC oversight and examinations in order to monitor their conduct and protect the interests of investors…investors in Ranieri Partners’ funds were denied these protections because Stephens acted outside the boundaries of the law, and Phillips and the firm ignored the essence of his activities.”