On May 20, 2020, the U.S. District Court for the Southern District of Indiana entered a final judgment against Steele Financial, Inc., an Indianapolis-based investment advisory firm, and its sole owner, Tamara Steele. In a separate administrative proceeding, the SEC also barred Steele from the securities industry.
The SEC’s complaint, filed on September 14, 2018, alleged that, between December 2012 and October 2016, Steele Financial and Steele sold to advisory clients and other investors more than $15 million of the securities of Behavioral Recognition Systems, Inc. (BRS), a private company the SEC previously charged with fraud. Steele and Steele Financial allegedly targeted their own advisory clients, selling approximately $13 million of BRS securities to more than 120 clients, without disclosing that they were receiving commissions from BRS. The complaint further alleged that Steele and Steele Financial created false invoices and took other steps to conceal their involvement selling BRS securities.
The final judgment permanently enjoins Steele and Steele Financial from violating the antifraud provisions of Sections 206(1), 206(2), and 206(3) of the Investment Advisers Act of 1940, Section 17(a) of the Securities Act of 1933, and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. In addition, the final judgment orders Steele to disgorge $845,760, which will be deemed satisfied by her return of 1,358,160 shares of BRS common stock to BRS’s Bankruptcy Trustee, and to pay a $75,000 civil penalty. Steele has also agreed to comply with an undertaking to cause Steele Financial to cease operations and terminate the corporation within 90 days of the entry of Final Judgment.
In a related administrative proceeding, the SEC today issued an order permanently barring Steele from association with any broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization, as well as permanently barring Steele from participating in any offering of penny stock. Steele consented to the District Court’s and the SEC’s orders without admitting or denying the allegations in the complaint or the findings of the SEC’s order.