Securities and Exchange Commission v. Locke Capital Management, Inc. et al

Filing 81

FINAL JUDGMENT AS TO DEFENDANT LEILA C. JENKINS in favor of Securities and Exchange Commission against Leila C. Jenkins. So Ordered by Judge William E. Smith on 6/30/11. (Jackson, Ryan)

UNITED STATES DISTRICT COURT
DISTRICT OF RHODE ISLAND
___________________________________
)
SECURITIES AND EXCHANGE COMMISSION,)
)
Plaintiff,
)
)
v.
)
C.A. No. 09-100 S
)
LOCKE CAPITAL MANAGEMENT, INC. and )
LEILA C. JENKINS,
)
Defendants.
)
___________________________________)

FINAL JUDGMENT AS TO
DEFENDANT LEILA C. JENKINS
After having considered the Commission’s motion for summary
judgment, all the pleadings and evidence submitted in support
thereof,

and

having

granted

the

Commission’s

motion

in

the

Court’s Opinion and Order also dated this day, June 30, 2011,
the Court enters this Final Judgment:
I.
IT IS HEREBY ORDERED, ADJUDGED AND DECREED that Jenkins and
her agents, servants, employees, attorneys, and all persons in
active concert or participation with them who receive actual
notice of this Final Judgment by personal service or otherwise
are

is

permanently

restrained

and

enjoined

from

violating

Section 17(a) of the Securities Act of 1933 (“Securities Act”)
[15 U.S.C. §77q(a)] in the offer or sale of any security by the
use

of

any

means

or

instruments

of

transportation

or

communication in interstate commerce or by use of the mails,
directly or indirectly:
(a)

to employ any device, scheme, or artifice to defraud;

(b)

to obtain money or property by means of any untrue
statement of a material fact or any omission to state
a

material

fact

necessary

in

order

to

make

the

statements made, in light of the circumstances under
which they were made, not misleading; or
(c)

to engage in any transaction, practice, or course of
business which operates or would operate as a fraud or
deceit upon the purchaser.
II.

IT IS HEREBY FURTHER ORDERED, ADJUDGED AND DECREED that
Jenkins and her agents, servants, employees, attorneys, and all
persons in active concert or participation with them who receive
actual notice of this Final Judgment by personal service or
otherwise

are

is

permanently

restrained

and

enjoined

from

violating Section 10(b) of the Securities Exchange Act of 1934
(“Exchange Act”) [15 U.S.C. §78j(b)] and Rule 10b-5 thereunder
[17 C.F.R. §240.10b-5] by, directly or indirectly, using any
means

or

instrumentality

of

interstate

commerce,

or

of

the

mails, or of any facility of any national securities exchange,
in connection with the purchase or sale of any security:

2 

(a)

to employ any device, scheme or artifice to defraud;

(b)

to make an untrue statement of a material fact or to
omit to state a material fact necessary in order to
make

the

statements

circumstances

made,
which

under

in

the

they

light

the

made,

were

of

not

misleading; or
(c)

to engage in any act, practice, or course of business
which operates or would operate as a fraud or deceit
upon any person.
III.

IT IS HEREBY FURTHER ORDERED, ADJUDGED AND DECREED that
Jenkins and her agents, servants, employees, attorneys, and all
persons in active concert or participation with them who receive
actual notice of this Final Judgment by personal service or
otherwise

are

is

permanently

restrained

and

enjoined

from

violating Sections 206(1) and (2) of the Investment Advisers Act
of

1940

directly

(“Advisers
or

Act”)

indirectly,

instrumentality

of

[15

U.S.C.

§§

using

the

mails

interstate

commerce

80b-6(1),

to:

or

any
(a)

(2)]

by,

means

or

employ

any

device, scheme, or artifice to defraud any client or prospective
client; or (b) engage in any transaction, practice, or course of
business which operates as a fraud or deceit upon any client or
prospective client.

3 

IV.
IT IS HEREBY FURTHER ORDERED, ADJUDGED AND DECREED that
Jenkins and her agents, servants, employees, attorneys, and all
persons in active concert or participation with them who receive
actual notice of this Final Judgment by personal service or
otherwise

are

is

permanently

restrained

and

enjoined

from

violating Section 207 of the Advisers Act [15 U.S.C. § 80b-7] by
willfully:
(a)

making an untrue statement of a material fact in a
registration

application

or

report

filed

with

the

Commission under Section 203 of the Advisers Act [15
U.S.C. § 80b-3] or Section 204 of the Advisers Act [15
U.S.C. § 80b-4]; or
(b)

omitting to state in any such application or report
any

material

fact

which

is

required

to

be

stated

therein.
V.
IT IS HEREBY FURTHER ORDERED, ADJUDGED AND DECREED that
Jenkins and her agents, servants, employees, attorneys, and all
persons in active concert or participation with them who receive
actual notice of this Final Judgment by personal service or
otherwise are is permanently restrained and enjoined from aiding
and abetting violations of Section 206(4) of the Advisers Act
[15 U.S.C. § 80b-6(4)] and Rule 206(4)-1(a)(5) thereunder [17
4 

C.F.R.

§

206(4)-1(a)(5)]

by

knowingly

providing

substantial

assistance, directly or indirectly, to any registered investment
adviser

in

publishing,

circulating,

or

distributing

any

advertisement that contains an untrue statement of a material
fact or which is otherwise false or misleading.
VI.
IT IS HEREBY FURTHER ORDERED, ADJUDGED AND DECREED that
Jenkins and her agents, servants, employees, attorneys, and all
persons in active concert or participation with them who receive
actual notice of this Final Judgment by personal service or
otherwise are is permanently restrained and enjoined from aiding
and abetting violations of Section 204 of the Advisers Act [15
U.S.C.

§

80b-4]

and

Rules

204-2(a)(6),

204-2(a)(8),

204-

2(a)(10), 204-2(a)(15), and 204-2(a)(16) thereunder [17 C.F.R. §
§ 275.204-2(a)(6), 204-2(a)(8), 204-2(a)(10), 204-2(a)(15), 2042(a)(16)]

by

knowingly

providing

substantial

assistance,

directly or indirectly, to any registered investment adviser in
failing to make and keep true, accurate, and current books and
records, including without limitation:
(a)

accurate trial balances and financial statements;

5 

(b)

a list or other record of all accounts for which the
adviser has discretionary authority with respect to
any funds, securities, or transactions of any client;

(c)

originals or copies of all written agreements between
the adviser and any client;

(d)

if

the

adviser

activities,
obtained

all

from

pays

written

any

cash

[17
and

fee

for

solicitation

acknowledgements

client

3(a)(2)(iii)(B)
3(a)(2)(iii)(B)]

a

pursuant
C.F.R.

copies

to

of

receipt

Rule

206(4)-

§
of

275.206(4)-

all

disclosure

documents delivered to clients by solicitors pursuant
to Rule 206(4)-3 [17 C.F.R. § 275.206(4)-3]; and
(e) all accounts, books, internal working papers, and any
other records or documents that are necessary to form
the basis for or demonstrate the calculation of the
performance or rate of return of any or all managed
accounts or securities recommendations of the adviser
in

any

article,
bulletin

notice,

circular,

investment
or

other

advertisement,

article,
communication

investment
that

the

newspaper
letter,
adviser

circulates or distributes, directly or indirectly, to
ten or more persons (other than persons connected with
Jenkins); provided, however, that with respect to the
performance of managed accounts, the retention of all
6 

account statements, if they reflect debits, credits,
and other transactions in a client’s account for the
period of the statement, and all worksheets necessary
to demonstrate the calculation of the performance or
rate of return of all managed accounts shall be deemed
to satisfy this requirement.
VII.
IT IS HEREBY FURTHER ORDERED, ADJUDGED AND DECREED that,
pursuant

to

§77t(d)],

Section

Section

20(d)

21(d)(3)

of

the

of

Securities

the

Act

[15

U.S.C.

Exchange

Act

[15

U.S.C.

§78u(d)(3)], and Section 209(e) of the Advisers Act [15 U.S.C.
§80b-9(e)],

Jenkins

shall

pay

disgorgement

of

$1,781,520,

representing profits gained as a result of the conduct alleged
in the Complaint, plus pre-judgment interest in the amount of
$110,956,
Jenkins

for

and

a

her

total

co-defendant

Management,

Inc.,

disgorgement

in

20(d)

of

the

disgorgement

are

this

in

jointly

amount.

Securities

amount

this

matter,

and

$1,892,476.

severally

Moreover,

Act

of

[15

Locke

liable

pursuant

U.S.C.

Capital
for

to

Section

§77t(d)],

Section

21(d)(3) of the Exchange Act [15 U.S.C. §78u(d)(3)], and Section
209(e) of the Advisers Act [15 U.S.C. §80b-9(e)], Jenkins shall
pay a civil penalty in the amount of $1,781,520.

Jenkins shall

make these payments within fourteen (14) days after entry of
this Final Judgment.

The payments shall be made by certified
7 

check, bank cashier's check, or United States postal money order
payable to the Securities and Exchange Commission.
shall

be

Management,

delivered

or

Securities

mailed
and

to

the

Exchange

Office

The payment
of

Commission,

Financial
Operations

Center, 6432 General Green Way, Mail Stop 0-3, Alexandria, VA
22312, and shall be accompanied by a letter identifying Jenkins
as a defendant in this action, setting forth the title and civil
action number of this action and the name of this Court, and
specifying that payment is made pursuant to this Final Judgment.
Jenkins

shall

pay

post-judgment

interest

on

any

delinquent

amounts pursuant to 28 U.S.C. § 1961. The Commission shall remit
the funds paid pursuant to this paragraph to the United States
Treasury.
VIII.
IT IS HEREBY FURTHER ORDERED, ADJUDGED AND DECREED that
this Court shall retain jurisdiction over Jenkins as a party to
this matter for all purposes, including the implementation and
enforcement of this Final Judgment.

8 

IX.
IT IS HEREBY FURTHER ORDERED, ADJUDGED AND DECREED that,
there being no just reason for delay, pursuant to Rule 54(b) of
the Federal Rules of Civil Procedure, the Clerk is ordered to
enter this Final Judgment forthwith and without further notice.

IT IS SO ORDERED:

/s/ William E. Smith
William E. Smith
United States District Judge
Date: June 30, 2011

9