SEC Charges Unlicensed Financial Advisor James S. Quay for Defrauding Investors in Atlanta Area
The Securities and Exchange Commission today charged an Atlanta-based unlicensed financial advisor with a history of steering retirees into fraudulent investment schemes with defrauding two elderly women he convinced to invest with him directly.
The SEC alleges that James S. Quay (Quay) and his brother Jeffrey A. Quay facilitated a scheme in which the women invested $560,000 with the understanding that they were investing in a covered-call equities trading program. The Quays created a sham limited partnership called Trinity Charitable Solutions (TCS) to purportedly operate the program. However, TCS never became a legal entity, and instead the Quays merely deposited the investors’ money in a Scottrade account and personally misused at least $180,000 to afford mortgage payments, lavish restaurant meals, and membership at a massage spa.
According to the SEC’s complaint filed in U.S. District Court for the Northern District of Georgia, Quay concealed from these two women and other investors that he is a convicted felon and disbarred attorney. Previously, Quay steered investors toward fraudulent investment opportunities from which he received $1.4 million in illicit sales commissions. For instance, Quay was an active sales agent and recruiter for a multi-million dollar Ponzi scheme conducted by a Georgia attorney and a scheme involving an unregistered covered-call equities trading program. He has used various aliases and fake names including Jim Quay, Stephen Quay, and Stephen Jameson.
The SEC alleges that Quay would often host free dinner seminars that target retirees in order to gain their trust. Quay would then encourage the attendees to schedule private consultations with him to discuss their financial situation in greater detail. Attendees would receive a biography that detailed Quay’s educational background and professional designations. The follow-up consultations would often take place at Quay’s personal office, where his legal diplomas, bar certification, and other professional licenses and certifications were displayed on the wall. While he would regularly tout his academic background and legal expertise, he typically would not disclose to investors his criminal background, disbarment, and loss of professional designations and licenses.
Quay agreed to settle the SEC’s charges by consenting to the entry of a final judgment by the court providing permanent injunctive relief under Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 and Sections 10(b) and 15(a) of the Securities Exchange Act of 1934 and Rule 10b-5. The proposed final judgment orders Quay to pay disgorgement of $1,403,638.62 plus prejudgment interest of $179,118.78 and a penalty of $450,000. Quay agreed to be permanently barred from association with any broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization. Quay also agreed to a penny stock bar and to be barred from appearing or practicing before the SEC as an attorney or an accountant. The settlement, in which Quay neither admits nor denies the allegations, is subject to court approval. The SEC’s litigation against Jeffrey Quay remains pending.
