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)

Stephens says Abshure then suggested a $20,000 figure and “offered to allow Stephens to make a $20,000 charitable contribution to NASAA in lieu of paying the fine to the Arkansas Securities Department.”

Stephens declined to make a contribution “because of Commissioner Abshure’s service as a board member and President of NASAA,” according to the complaint.

At that point, Abshure offered to let Stephens instead make a charitable contribution to Economics Arkansas, a Little Rock nonprofit that trains teachers to teach economic concepts. Abshure is also on its board of directors.

The Stephens representatives again declined to make a contribution and said the firm would prefer to pay a fine. (Stephens cited no cases in which contributions were actually made to Economics Arkansas in lieu of an ASD fine.)

At the end of the meeting, Stephens asserts, the parties were in agreement that Stephens would pay a fine but “remained in disagreement as to whether the amount of the fine should be $20,000 or $15,000.”

The following week, when staff attorney Freydl sent over a draft consent order, the ASD “had unilaterally increased the amount of the fine to $25,000,” according to Stephens.

When Stephens objected, Freydl eventually made what Stephens interpreted as a threat — “a full examination of all agents of Stephens” who had sold the nontraditional exchange-traded funds. “It is likely that after such examination, the Staff would request a substantially higher amount,” Freydl said in an email quoted by Stephens in its ethics complaint.

On Aug. 22, Stephens signed the consent order containing the $25,000 fine. The signed copy was delivered to the ASD at 3:25 p.m. At 4 p.m., Freydl emailed a scanned copy of the signed agreement to Arkansas Business — which Stephens learned about when Arkansas Business called spokesman Frank Thomas for comment. A similar copy was not emailed to Stephens until 4:07 p.m.

Sending the order to the press even before sending it to Stephens was “further evidence of the direct retaliatory actions taken by the Commissioner and the Arkansas Securities Department for Stephens’ refusal to make a charitable contribution to either NASAA or Economics Arkansas,” Stephens wrote. It was also, the company complained to the Ethics Commission, “an effort to seek accolades and publicity for Commissioner Abshure.”

Abshure’s Response

Abshure had not seen Stephens’ complaint before it was delivered to Arkansas Business on Nov. 21 and had not formally responded to it. But he addressed many of the points in an interview on Nov. 22.

He denied strenuously that any of his actions were taken in retaliation for Stephens’ unwillingness to make a contribution to either NASAA or Economics Arkansas.



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