Auerbach et al.

U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 26170 / November 18, 2024

Securities and Exchange Commission v. Auerbach et al., No. 1:19-cv-5631 (E.D.N.Y. filed Oct. 4, 2019)

SEC Obtains Final Judgment Against Defendant for Receiving Kickbacks in Bribery Scheme

On November 15, 2024, the Securities and Exchange Commission obtained a final judgment against defendant Richard Brown for accepting kickbacks in an alleged scheme to defraud investors.

The SEC’s complaint, filed in the Eastern District of New York on October 4, 2019, alleged that from approximately July 2014 through October 2015, Brown, then a registered stockbroker, accepted cash bribes from the CEO of Nxt-ID, Inc. and another defendant to purchase more than $750,000 worth of Nxt-ID, Inc. common stock in his customers’ accounts. Brown allegedly made the purchases without informing his customers that he was receiving kickbacks in connection with the purchases.

Without admitting or denying the SEC’s allegations, Brown consented to the entry of a final judgment permanently enjoining him from violations of the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, permanently barring him from participating in an offering of penny stock, and ordering disgorgement of $10,000 in ill-gotten gains and prejudgment interest thereon.

The litigation was led by Mary Kay Dunning and Lindsay S. Moilanen and supervised by Tejal D. Shah and Preethi Krishnamurthy.