Securities Department Goes After Firm That Did Business With Martha Shoffner's Office

by Gwen Moritz  on Tuesday, Mar. 11, 2014 9:06 am  

State securities regulators are seeking to suspend or revoke the registration of the Russellville firm and CEO that formerly employed the broker who allegedly bribed former State Treasurer Martha Shoffner.

The Arkansas Securities Department says Robert Keenan and his St. Bernard Financial Services Inc. failed to properly supervise Steele Stephens and his trades on behalf of Shoffner's office. Stephens was granted immunity in exchange for his testimony against Shoffner, whose trial on bribery and extortion charges continues Tuesday in federal court in Little Rock.

Keenan says the action is the ASD's way of retaliating for an ethics complaint he recently filed against the head of the department, Arkansas Securities Commissioner Heath Abshure. But that ethics complaint was filed three weeks after Keenan was notified of the ASD's plan to file its complaint (PDF).

The complaint filed against Keenan and St. Bernard (PDF), made Feb. 11 by ASD staff attorney Scott Freydl, asks Abshure, Freydl's boss, to consider whether the state registrations of Keenan and St. Bernards should be suspended or revoked and whether fines should be levied against them. Abshure had not yet taken action on it as of Monday.

In a related action, the ASD recently suspended the broker-dealer and investment adviser registrations of W. David Crain, a CPA who worked at St. Bernard, for failing to cooperate with the ongoing investigation. 

Keenan, in a formal response filed by Russellville attorney John D. Van Kleef (PDF), denied any wrongdoing personally or by the firm, and said he and the firm "should not be held responsible for any falsehoods, lies or subterfuges, if any, of its agent, Stephens."

In emails to Arkansas Business, Keenan said that he expects Abshure, as "both the judge and the jury," to rule against him. Accordingly, he has "already made plans for appealing his ruling" to circuit court, which is the appeal process under the Arkansas Securities Act.

Abshure told Arkansas Business that he would not personally hear Keenan's case but would appoint a hearing officer.

(Click here for an article on a suggested change in the process.)

Complaint Against Abshure

Keenan also suggested that the ASD was retaliating for an ethics complaint — previously unreported — that he had filed against Abshure. Complaints filed with the Arkansas Ethics Commission are not public information until an official action is taken.

On Jan. 3, the ASD issued a written notice of its intention to file a complaint against Keenan and St. Bernard Financial. The notice, also written by Freydl, gave Keenan and his firm until Jan. 31 to submit evidence refuting the finding detailed in the notice.

 

 

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