Litigation Release No. 24850 / June 7, 2020
Securities and Exchange Commission v. Smith, et al., Civil Action No 2:19-cv-17213 (D.N.J. filed August 27, 2019)
The Securities and Exchange Commission announced that a court has appointed Kevin Kent, Esq. of Conrad O’Brien as Receiver over the assets of defendant Brenda Smith and entities she controls, including defendants Broad Reach Capital, LP, Broad Reach Partners, LLC, and Bristol Advisors, LLC. The SEC had moved on May 19, 2020 for the appointment of a receiver.
In its complaint, filed on August 27, 2019, the SEC alleged that Brenda Smith and her fund Broad Reach Capital, LP raised approximately $105 million from approximately 40 investors based on false representations that she would invest their money in publicly traded securities through various trading strategies that she championed as providing consistently high returns. According to the complaint, Smith and her entities made false statements to investors concerning supposed positive returns their investments were generating. In addition, the complaint states that Smith and the entities she controlled provided investors fabricated documents that inflated Broad Reach’s assets. As alleged, however, Smith largely used investors’ money to repay other investors and for her own personal investments. The SEC obtained an emergency asset freeze at the time it filed the complaint, and later obtained a preliminary injunction extending the freeze.
Smith was arrested on August 27, 2019, and was indicted for securities fraud and other charges on June 2, 2020 in U.S. District Court for the District of New Jersey.
The SEC’s continuing investigation is being conducted by Burk Burnett, Dustin Ruta, and Scott A. Thompson in the Philadelphia Regional Office, and supervised by Regional Director Kelly L. Gibson. The SEC’s litigation is being led by John V. Donnelly III and Mark R. Sylvester. The matter arose out of a referral from the Philadelphia Regional Office’s National Examination Program and an examination conducted by Aidan Busch, Andy Groum, Michael Nally, and Brian Carroll, under the supervision of Eric Whitman. The SEC appreciates the assistance of the U.S. Attorney’s Office for the District of New Jersey and the Federal Bureau of Investigation.