On August 23, 2017, the United States Securities and Exchange Commission obtained an emergency court order against Sonya D. Camarco prevening her from further dissipating stolen client assets of approximately $2.3 million from almost a dozen of her brokerage customers.
Sonya D. Camarco was associated with LPL Financial in Colorado Springs, Colorado from February 2004 through August 9, 2017.
On August 9, 2017, Camarco was fired by LPL supposedly upon the discovery that she had deposited third party checks from client accounts into a bank account that she controlled and accessing client funds for personal use.
According to the SEC’’s complaint, over the course of 13 years, Sonya D. Camarco, a resident of LPL Financial, Colorado, stole approximately 2.3 million from her clients’ accounts and then lied to her clients about the withdrawals.
The SEC alleges that Camarco forged client signatures on checks made out an entity that the used, and had the checks sent to a private post office box that she rented. Camarco also allegedly liquidated securities in her clients’ accounts to make unauthorized payments to accounts she controlled.
The complaint alleges that Camarco used the stolen client funds to pay her personal credit card bills and her mortgages.
When confronted by her customers, Camarco lied and them that their money was invested in an outside investment that she made on their behalf. When questioned by LPL, Camarco also, at least according to the SEC Complaint, lied again, saying that she had no affiliation with the subject entity and told LPL it was an outside investment held by one of her advisory clients.
Camarco has about 100 clients or customers, but is alleged to have stolen $2 million of approximately 15 individuals.
The SEC also charged Camarco Investments, Inc. and Camarco Living Trust as relief defendants based on their alleged receipt of stolen client funds.
The SEC’s complaint, filed in federal court in Colorado on August 23, 2017, charges Camarco with violations of Sections 17(a)(1) and (3) of the Securities Act of 1933, and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5(a) and (c) thereunder, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. The complaint seeks disgorgement of allegedly ill-gotten gains plus interest from all the defendants and seeks a permanent injunction against and penalties from Camarco.
Based upon the foregoing, it is not unreasonable to think that Camarco may be charged criminally. However, at this point in the process, the SEC’s complaint are only allegations. It is remarkable, and indeed commendable, that the SEC was able to swiftly effect an asset freeze pending the disposition of this matter.
As a general principle, under such circumstances, the broker-dealer, with whom Camarco was associated, here LPL Financial, may be held responsible for her conduct, i.e. stock broker theft, under common law agency principles, including respondeat superior, and as a “control person” pursuant to Section 20(a) of the Exchange Act of 1934. Courts and securities arbitration panels, in identical circumstances, have long held brokerage firms responsible for the conduct of their registered representatives in “selling away” cases based upon the broker-dealer’s failure to supervise.
LPL’s first clue should have been the payment of customer funds to a third party in at least more than one of her customer accounts.
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