Ranieri Partners Settles SEC Case Over Unregistered BrokerJoshua Gallu
Ranieri Partners, the private-equity firm founded by mortgage-bond pioneer Lewis S. Ranieri, will pay $375,000 to settle U.S. regulatory claims it improperly solicited more than $500 million from investors.
William Stephens was paid fees by Ranieri for soliciting investors even though he wasn’t registered as a broker, the Securities and Exchange Commission said in a statement today. Stephens agreed to be barred from the securities industry and Donald Phillips, a former senior managing director who oversaw his work for Ranieri, will pay $75,000.
“Registered brokers are subject to SEC oversight and examinations in order to monitor their conduct and protect the interests of investors,” Merri Jo Gillette, director of the SEC’s Chicago office, said in a statement. “Investors in Ranieri Partners’ funds were denied these protections because Stephens acted outside the boundaries of the law.”
Stephens, Phillips and the firm settled the claims without admitting or denying the allegations. Phone calls to attorneys for Ranieri Partners and Phillips weren’t immediately returned. A call to an Illinois number listed for Stephens wasn’t answered.
According to the SEC’s order, Stephens sent private placement memoranda, subscription documents and due diligence materials to potential clients, urging at least one investor to consider adjusting portfolio allocations to accommodate an investment with Ranieri Partners. He also provided confidential information identifying other investors and their capital commitments as well as his analysis of the strategy and track record of the firm, the SEC said.
Phillips, who oversaw Stephens, aided and abetted the violations by ignoring red flags indicating that Stephens had gone well beyond the limited role of a “finder” and was instead actively soliciting investments, which would’ve required that he be registered as a broker, the SEC said.
Phillips was also suspended from acting in a supervisory capacity at an advisory firm or brokerage for nine months, according to the order.