Securities Department, Crain Clash Over Post-Shoffner Subpoena

by Arkansas Business Staff  on Monday, May. 5, 2014 12:00 am  

You may know that the Arkansas Securities Department is after W. David Crain, a CPA who worked for St. Bernard Financial Services Inc., the Russellville firm under fire for employing Steele Stephens, a broker who bribed former state treasurer Martha Shoffner.

The department requested some documents from Crain following the Shoffner trial.

You may have also heard that Crain was surprised when — after refusing the department’s requests, claiming tax season was too hectic a time for an investigation — inspectors from the department knocked on his door with a subpoena.

Crain then turned in his licenses and, at about the same time, the department suspended them.

“I was getting out of the business anyway,” Crain told Whispers. “I said I was going to resign, but they said, ‘No, we’re still going to do this.’”

Crain claims that the regulators are going after the wrong target, that he “can’t give them what I don’t have.”

The ASD has requested that the Pulaski County Circuit Court order Crain to respond to the subpoena, and a summons has been issued.

Regulation Litigation

But why is the ASD going after Crain?

Scott Freydl, a staff attorney, said it’s not usual for the department to investigate firms following incidents of misbehavior to be sure that the situation was isolated to a single employee.

“Quite often we do end up looking at the firm and other employees of the firm,” he said.

But for Crain in particular, it all goes back to regulations — regulations that Freydl believes Crain dishonored.

 

 

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