State Securities Regulator Heath Abshure Disputes Ethics Complaint by Stephens Inc.

by Gwen Moritz  on Monday, Dec. 2, 2013 12:00 am  

Heath Abshure, shown in a file photo from 2011, has been commissioner of the Arkansas Securities Department for six years. (Photo by Jason Burt)

In the other two examples cited by Stephens — a $14,150 contribution by Uvest Financial Services Group in December 2012 and $8,200 by ProEquities Inc. in November 2012 — Abshure said Arkansas was merely the beneficiary of a multi-state settlement that NASAA helped negotiate. Because his staff did little work on those cases, he said, he forwarded the state’s part of the settlement to NASAA, which provides training to his securities examiners at no direct cost to the state.

“NASAA is not a pet project and it certainly is not my favorite charity,” Abshure said. “The truth of the matter is, without NASAA there, we wouldn’t be able to do what we do. We’d just be one state acting alone.”

In no case, Abshure said, was any individual or firm allowed to make a charitable contribution in lieu of being cited in a consent order available to the public and to FINRA. And if any regulated entity requests a formal hearing — Stephens Inc. and Crews & Associates both waived that right — such an “informal” remedy is not available by law, he said.

What’s more, he said, settlements calling for payments to nonprofit organizations are not unique to his tenure as securities commissioner, to his department or even to the state of Arkansas. For example, in 2006, Abshure’s predecessor, Michael Johnson, and Mike Beebe, then attorney general, jointly signed an order paying $62,500 of Arkansas’ share of a multi-state settlement with Ameriquest Mortgage Co. to the Conference of State Bank Supervisors, a national organization similar to NASAA.

A memo in the ASD’s file says directing the Ameriquest settlement to the CSBS was approved by then-Gov. Mike Huckabee’s office and by the state Department of Finance & Administration.

Regulatory Action

Abshure, now 40, was a partner at the Williams & Anderson law firm in Little Rock specializing in corporate securities when Gov. Mike Beebe chose him as securities commissioner in November 2007. He had previously spent two years as a staff attorney for the Securities & Exchange Commission in Washington, D.C.

During his tenure, Abshure has intensified the Arkansas Securities Department’s examinations of broker-dealers, which also answer to FINRA and the SEC, in addition to its traditional oversight of investment advisers, who have little other regulation.

According to Stephens’ complaint, the firm was notified in May that the ASD intended to file a complaint against Stephens and a former employee, Wayne LaRue. (LaRue was later fined individually, and his name does not appear in the order that was negotiated with Stephens Inc.)

After responding to the notice from the ASD, Knight and two other Stephens attorneys, Kim Fowler and Kevin Burns, met with Abshure and two of his employees, staff attorney Scott Freydl and investigator Scott Fowler, on Aug. 8. (The Fowlers are not related.)

At that meeting, Stephens alleges, Abshure suggested a $30,000 fine for Stephens’ failure to have written policies in place regarding the sale of inverse and leveraged exchange-traded funds. (See sidebar here.) The Stephens representatives countered with an offer of $15,000, the amount that Abshure had fined Morgan Keegan & Co. in October 2012 because one of its employees sold inverse and leveraged ETFs to a customer for whom they were inappropriate investments.

In its ethics complaint, Stephens described its case and that of Morgan Keegan as “similar circumstances,” a comparison Abshure says was so disingenuous as to be a lie.



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