Razzle Dazzle Broker Who Hoodwinked Athletes Settles with SEC
The partner of a barred broker at Morgan Stanley agreed on Friday to allow the Securities and Exchange Commission to continue proceedings against him in bankruptcy court and before an administrative judge in cases that have already cost his former employer more than $800,000.
Sylvester King Jr., who worked with around 40 professional athletes as a partner of “bada-bing’’ broker Aaron Parthemer at Morgan Stanley and Wells Fargo Advisors, raised more than $5 million from clients from 2009 to 2013 for a private investment that he did not disclose to the firms, according to a cease-and-desist and sanctions order posted on the SEC’s enforcement website.
King, 44, whose registration was revoked by Finra in July 2015 on charges of failing to pay a fine in a related case, agreed to submit to SEC Administrative Law proceedings to determine whether the agency can apply civil penalties. As part of the settlement, he also agreed that he would not challenge the SEC’s claim on his assets in a bankruptcy settlement to satisfy any penalties.
King, who accepted the allegations without admitting or denying the findings, could not be reached for comment. James Sallah, a Florida-based lawyer who represented King and Parthemer in a Financial Industry Regulatory Authority arbitration complaint in 2015, did not return a call for comment.
While working in Ft. Lauderdale for Morgan Stanley and then Wells, King and his “business partner” raised money for a start-up company called Global Village Concerns that made customized school memorabilia. GVC is no longer operating, according to the order.
King and his partner falsely told some customers in written reports that their investments of $200,000 to $250,000 had increased by 20% to 40% in just six months, the SEC said. The valuations were made with “no reasonable basis” or due diligence, according to the settlement.
The SEC also charged King with violating rules of conduct of the NFL Players Association that prohibit brokers from recommending investments without disclosing their financial interests. King received stock options and warrants in GVC for successful solicitations, the consent order said.
Parthemer agreed to an industry bar and payment of civil penalties in an April 2015 settlement with Finra, according to his BrokerCheck disclosure history.
Finra at the same time fined King $35,000, and later revoked his license for failing to pay the fine.
He was charged with helping to conceal more than $400,000 in loans made to customers and with participating in private securities transactions that raised more than $3 million from eight of them. He also provided false information to Morgan Stanley about the activities, the regulator said.
In May 2016, a Finra arbitration panel ordered Morgan Stanley to pay $819,300 to former NBA point guard Keyon Dooling and NFL offensive tackle John St. Clair for failing to supervise investments Parthemer solicited from them in a Miami nightclub called Club Play and in GVC.
Two months later, former NFL cornerback Asante Samuel and Mega-Millions lottery winner Jame Groves brought arbitration complaints against Morgan Stanley and Wells Fargo over similar issues, according to Parthemer and King’s BrokerCheck complaint records.
The second case is still pending.