Former Carty & Company Executive Sentenced To 30 Months Imprisonment For Securities Fraud
Memphis, TN – United States District Judge S. Thomas Anderson sentenced Bradford Keith Dent, 48, of Memphis, Tennessee, to 30 months in prison for violating securities fraud, announced Edward L. Stanton, III, United States Attorney for the Western District of Tennessee.
According to the indictment, on or about April 30, 2008, the defendant, Bradford Keith Dent, 48, executed a scheme and artifice to defraud a person in connection with a commodity for future delivery, an option on a commodity for future delivery, and a security of an issuer with a class of securities registered under Section 12 of the Securities Exchange Act of 1934 (15 U.S.C. Section 78l) and that is required to file reports under Section 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. Section 78(d)), as follows:
Dent began working for Carty & Company, a full-service broker/dealer, with offices located in Memphis, Tennessee, specializing in fixed income securities, as Vice President of the Equity Department. The Equity Department is a small operation of Carty & Company, mainly focused in bonds and government-backed instruments. Dent worked in that capacity for Carty & Company, Inc. until he was terminated in June 2008, after he was discovered to have been day trading without authorization on Carty & Company proprietary accounts, or “error accounts,” which he had been warned about on at least one prior occasion. “Day trading” refers to the practice of buying and selling financial instruments within the same day so that all positions are usually closed before the market closes for the trading day.
The aggregate net loss associated with the Carty & Company error account from which Dent was day trading between September 2007 and June 2008 was $129,934.31.
In January 2009, a Carty & Company employee and investment account holder reported two unauthorized trades, one buy and a subsequent sale, of 25,000 shares of Southwestern Energy Company Delaware stock, indicated on his bond account occurring on April 25, 2008. These two trades accounted for a $126,493.64 loss to the bond account. It was later determined that this trade was created by Dent to cover up the losses from the error account that he had accumulated as a result of his day trading activities. The “losses” from the bond account were transferred as gains to the error account, thereby erasing the losses to the error account and seemingly attributing the losses to the bond account to a negative investment of the account holder.
Carty & Company reimbursed the bond account holder $126,513.64 and claimed total losses in the amount of $129,934.31.
United States Attorney Edward L. Stanton, III, said: "This case demonstrates our ongoing and vigorous efforts to root out fraud from the marketplace. Dent's prison sentence is a message to anyone operating a scheme to cheat investors out of their savings: You will get caught, and you will be prosecuted to the fullest extent of the law."
Special Agent in Charge of the Memphis Division of the Federal Bureau of Investigation, Aaron T. Ford, stated “Investigating securities fraud is a high priority for the FBI because these crimes affect the public’s trust and make it difficult to know where people can safely invest their hard-earned money. The FBI will continue to address these matters, no matter how complex the scheme, in order to ensure the safety of investors in our communities.”
The investigation was conducted by Special Agent Kris Chatham of the Federal Bureau of Investigation. Assistant U.S. Attorney Justin Bailey represented the government.