Our law firm is investigating claims against FINRA broker-dealer Resource Horizons Group, LLC (“Resource Horizons”) relating to allegations of fraud committed by former Resource Horizons broker Robert Gist a/k/a Bob Gist (“Gist”) (CRD No. 716088). On May 31, 2013, the Securities and Exchange Commission charged Gist with defrauding at least 32 customers out of at least $5.4 million from about 2003 to the present.
According to the SEC’s complaint filed in the U.S. District Court for the Northern District of Georgia, Gist obtained the customers’ funds on the fraudulent pretense that he would invest the funds conservatively in corporate bonds and other securities. The complaint alleges that Gist invested none of the customer funds, but, instead, used the funds for his personal expenses, for the payment of purported dividends and proceeds from securities sales that he falsely claimed to have purchased on behalf of his customers, and for the operation of a company that he controlled until early 2013 known as ENCAP Technologies, LLC. The complaint further alleges that Gist regularly created and provided the customers of Gist Kennedy with fictitious account statements.
The SEC’s complaint further alleges that Gist used at least $2.2 million of the converted customer funds for the operation of ENCAP Technologies, LLC (“ENCAP”) during the time that he controlled ENCAP, and that the company gave nothing of value in return for the money. The complaint names ENCAP as a relief defendant and seeks disgorgement from it of unjust enrichment in the amount of at least $2.2 million plus prejudgment interest.
Without admitting or denying the SEC’s allegations, Gist and Gist Kennedy, company Gist controls, agreed to settle the case against them. The settlement is pending final approval by the court. Specifically, Gist and Gist Kennedy consented to the entry of an order permanently enjoining them from future violations of Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rules 10b-5 thereunder; permanently enjoining Gist from future violations of Section 15(a) of the Exchange Act; finding Gist and Gist Kennedy jointly and severally liable for $5.4 million in disgorgement plus prejudgment interest, imposing civil penalties to be determined upon motion of the Commission, freezing the Gist and Gist Kennedy’s assets, and providing other relief.
FINRA and Gist Enter Into Letter of Acceptance, Waiver and Consent (“AWC”)
In addition to the action filed by the SEC, FINRA and Gist entered into a AWC which is a settlement of alleged rule violations, relating to Gist’s sales of investments in ENCAP Technologies, LLC . According to FINRA, from approximately 2003 until December 2011, Gist misappropriated several million dollars from approximately 30 of his customers. In order to carry out the scheme, Gist misrepresented to these customers that he would invest their money in securities positions. Instead, Gist invested the customers’ funds in ENCAP Technologies, LLC, a company he co-founded. In furtherance of the scheme, Gist created and sent account statements with wholly fictitious securities positions to his customers every six months. Gist also perpetuated the scheme by selling units of ENCAP Technologies owned by him, or used other investors5 funds, in order to make periodic payments to his customers. As a result of the foregoing conduct, Gist willfully violated Section 10(b) of the securities Exchange Act of 1934, SEC Rule 10b-5 promulgated thereunder, NASD Rules 2120 and 2110 (for conduct before December 15,2008), FINRA Rules 2020 and 2010 (for conduct after December 15, 2008), NASD Rule 2330(a) (for conduct before December 14, 2009), FINRA Rule 2150(a) (for conduct after December 14, 2009), and NASD Rule 3110(a). FINRA barred Gist from associating with any FINRA member in all capacities.
From March 2001 to December 2011, Gist was registered with Resource Horizons. Under FINRA Rules, Resource Horizons was obligated to properly supervise the activities of Gist during the time he was registered with the brokerage firm. Accordingly, Resource Horizons may be liable for failing to supervise Gist’s activities while registered at the firm, and could potentially be responsible for compensating customers of Gist for their losses.
If you have information relating to this investigation or invested with Gist, please contact the Law Firm of KlaymanToskes, toll free at 888-997-9956.