J.B. Oxford Settles SEC Charges

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National Clearing Corp., a Beverly Hills-based broker dealer, its parent company, J.B. Oxford Holdings, and three former National Clearing executives agreed to pay more than $2 million to settle charges they defrauded investors by participating in a late-trading and market-timing scheme, the Securities and Exchange Commission said in a statement Wednesday.


The JB Oxford unit will pay a $1 million civil fine and disgorge $1 million in “ill-gotten gains.” JB Oxford also agreed not to have a controlling interest in or operate a broker-dealer clearing business for five years.


The SEC said that between June 2002 and September 2003, National Clearing made thousands of late trades in more than 600 mutual funds on behalf of its customers and worked with other institutional investors who engaged in late-trading and market-timing. The company received about $1 million in compensation while its customers reaped nearly $8 million at the expense of long-term mutual fund shareholders. National Clearing also worked to conceal its customers’ fraudulent market timing, the SEC said.


James Lewis, the former National Clearing president and chief executive and JB Oxford board member, agreed to pay a $200,000 penalty and was barred for five years from serving as an officer or director at a public company and from associating with any broker or dealer, the SEC said.


Former National Clearing Director of Operations Kraig Kibble agreed to pay $50,000, and faces a four-year ban. James Lin, the former vice president of correspondent services for National Clearing, agreed to a $35,000 penalty and a three-year ban.


The SEC said the settlements hold accountable traders, mutual fund advisers and broker-dealers “who facilitate abusive and illegal trading tactics at the expense of the ordinary investor.”


The defendants settled the charges, which were filed in August 2004, without admitting or denying the allegations.

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