SOURCE: Equity Trust Company

Equity Trust Company

June 29, 2016 08:00 ET

Equity Trust Company Prevails in SEC Administrative Proceeding

WESTLAKE, OH--(Marketwired - Jun 29, 2016) - Equity Trust Company announced today that Administrative Law Judge Carol Fox Foelak of the Securities and Exchange Commission has dismissed the SEC administrative proceeding against Equity Trust and found that Equity Trust did not cause the violation of federal securities laws by two unrelated parties. 

Judge Foelak's decision follows an eight-day hearing involving 27 witnesses held in Washington, D.C. in December 2015 in a civil administrative proceeding brought by the SEC's Enforcement Division. "We applaud Judge Foelak's findings that Equity Trust was not a cause of the violations committed by these outside parties," said Matt Wilson, Equity Trust's CEO. Mr. Wilson went on to note that "we have consistently maintained that our actions were at all times consistent with our legal and contractual duties as a passive IRA custodian and in accordance with all applicable industry standards and regulatory guidance, including the guidance issued by the SEC itself. We also are very pleased that the Judge recognized that the promotion of our retirement plan custodial services was consistent with our role as a passive custodian."

Howard Groedel of Ulmer & Berne LLP in Cleveland, Ohio and Stephen J. Crimmins of Murphy & McGonigle in Washington D.C., co-counsel for Equity Trust, stated that "the underlying charges in this proceeding arise from the sale of securities by Ephren Taylor and Randy Poulson during 2007 - 2010. Mr. Crimmins, a former senior official at the SEC Enforcement Division, noted that this was the first SEC enforcement action ever brought against an IRA custodian alleging securities law violations, and that the Judge found the Division's proposed standard of care was "essentially made up of whole cloth." 

Mr. Groedel noted that Equity Trust's voluntarily-adopted investment review procedures effectively halted efforts by Taylor and Poulson to cause further harm to Equity Trust's customers, and that Equity Trust and its custodial agreements complied with the standards set forth in the SEC Commissioners' own 2011 Investor Alert on Self-Directed Individual Retirement Accounts and a similar 2014 advisory issued by the North American Securities Administrators Association. "We are especially pleased by the fact that the Judge held that 'no other SDIRA custodian was performing the level of review of customer accounts that Equity Trust pioneered,'" noted Groedel.

Under SEC rules, Judge Foelak's decision will not become final until the Commission issues an order of finality. Mr. Crimmins noted that Judge Foelak has given both parties 21 days to petition her decision to the Commission.

About Equity Trust Company
Equity Trust Company is a financial services company that enables individual investors, financial professionals and institutions to diversify investment portfolios through alternative asset classes, including real estate, tax liens, private equity and precious metals. Equity Trust Company (or its affiliates) offers custodial services for alternative investments, investment in alternative assets with individual retirement accounts, back-office solutions for RIAs, brokerage services, directed trustee services and more. Equity Trust Company evolved from a predecessor brokerage firm which started in 1974, to a financial services company today serving more than 300,000 accounts, representing over $30 billion in assets under custody and administration.

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