SEC Charges Paulson Stockbroker With Selling Away
Minish Joe Hede of New York New York a stockbroker formerly employed by Paulson Investment Company is named in a Complaint brought by Securities Exchange Commission (SEC) who alleges that Hede was selling away from his securities broker dealer employer and had sold promissory notes as an unregistered broker. United States Securities and Exchange Commission v. Minish Joe Hede Case No. 1:20-cv-06724 (Aug. 21, 2020).
According to the SEC, Hede engaged in private securities transactions involving the sale of promissory notes issued by Belize Infrastructure Fund I LLC. SEC alleged that during this time, Hede was prohibited from effecting these sales because he did not provide written notification to his securities broker dealer and get its permission to effect the sales. Hede concealed his offer and sale of the promissory notes from the securities broker dealer. The Complaint alleges that Hede was an unregistered broker in violation of federal securities laws.
SEC also alleged that Belize Infrastructure Fund I LLC was a sham investment that Hede recommended to investors. SEC noted that Belize principal Brent Borland pleaded guilty to fraud. United States v. Borland Case No. 18-cr-00487 (S.D.N.Y. February 2019). Borland used funds raised by the promissory notes to pay for luxurious automobiles and his mortgage rather than construct an airport in Belize as he represented to investors.
SEC alleged that 21 investors had been sold the investments through Hede and another Paulson Investment Company broker Kevin Graetz. Those investors lost $9,600,000.00 even though Hede and Graetz generated hundreds of thousands of dollars in commissions. SEC alleges that Hede profited through selling away when his customers incurred catastrophic losses.
SEC alleges that Hede’s conduct was violative of Securities Exchange Act of 1934 Section 15(a).
FINRA Public Disclosure reveals that Hede has been barred from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity based upon accusations that he neglected to respond to FINRA’s request for information. Case No. 2016052540601 (Feb. 13, 2018). FINRA Public Disclosure confirms that Hede was suspended in 2017 and then barred in 2018 after failing to request the termination of that suspension with FINRA personnel by the 2018 deadline.
FINRA Public Disclosure reveals that Hede has been identified in seven customer initiated investment related disputes concerning allegations of his misconduct during the period in which he was employed with securities broker dealers including Paulson Investment Company. On December 22, 2016, a customer filed an investment related complaint involving Hede’s conduct in which the customer sought $1,000,000.00 in damages founded on accusations that misrepresentations and omissions had been made by the stockbroker in regard to promissory notes sold to the customer while Hede was registered with Paulson.
Another customer initiated investment related arbitration claim involving Hede’s activities was resolved for $165,000.00 in damages supported by allegations of negligence by Hede in regard to the sale of fraudulent promissory notes. FINRA Arbitration No. 17-00876 (Sept. 25, 2018). The claim alleges misrepresentation and unjust enrichment by Hede. On November 11, 2019, a different customer filed an investment related arbitration claim involving Hede’s conduct where the customer requested $1,015,000.00 in damages based upon accusations of the stockbroker’s omissions relating to private placement offerings. FINRA Arbitration No. 19-03284.
Hede is also referenced in a customer initiated investment related arbitration claim which settled for $225,000.00 in damages founded on allegations of the customer being defrauded by investing in promissory notes because of Hede during the period in which Hede was associated with Paulson. FINRA Arbitration No. 19-00503 (Feb. 12, 2020). According to the claim, unregistered investments were sold to the customer by Hede through a private securities transaction.
Hede’s registration with Paulson Investment Company was terminated on May 2, 2017.