SEC v. John A. Paulsen, No. LR-24953, Southern District of New York (Oct. 27, 2020) — Press Release
raw: John A. Paulsen
John A. Paulsen, No. LR-24953 (S.D.N.Y. Oct. 27, 2020)
John A
John A. Paulsen, a former managing director and fixed income research analyst, was found liable for aiding and abetting a pay-to-play scheme involving the New York State Common Retirement Fund. Paulsen and Deborah D. Kelley entertained Navnoor S. Kang, the Fund's Director of Fixed Income, in exchange for directing $50 billion in state business to their broker-dealer, generating sizable commissions. The court found that Paulsen submitted false expense reports and lied to internal investigators to conceal the scheme. Paulsen was found liable for aiding and abetting violations of antifraud provisions, and the SEC is seeking a permanent injunction and civil penalties.
John A. Paulsen, a former managing director and fixed income research analyst, was found liable for aiding and abetting a pay-to-play scheme involving the New York State Common Retirement Fund. Paulsen and Deborah D. Kelley entertained Navnoor S. Kang, the Fund's Director of Fixed Income, in exchange for directing $50 billion in state business to their broker-dealer, generating sizable commissions. The court found that Paulsen submitted false expense reports and lied to internal investigators to conceal the scheme. Paulsen was found liable for aiding and abetting violations of antifraud provisions, and the SEC is seeking a permanent injunction and civil penalties. The SEC secured a virtual bench trial victory against John A. Paulsen, a former fixed income analyst, for aiding and abetting a pay-to-play scheme involving New York State Common Retirement Fund Director Navnoor S. Kang. From 2014 to 2016, Paulsen and registered representative Deborah Kelley provided thousands of dollars in improper entertainment to Kang and his girlfriend, while submitting falsified expense reports to their broker-dealer to conceal the payments. In exchange, Kang directed approximately $50 billion in state investment business to the firm, generating substantial commissions. The court found Paulsen liable for aiding and abetting violations of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act, concluding he knowingly participated in the quid pro quo scheme and lied during the internal investigation. The SEC is seeking a permanent injunction and civil penalties, following prior judgments against Kang and Kelley. The SEC secured a virtual bench trial victory against John A. Paulsen, a former fixed income analyst, for aiding and abetting a pay-to-play scheme involving New York State Common Retirement Fund Director Navnoor S. Kang and registered representative Deborah D. Kelley. From 2014 to 2016, Paulsen and Kelley provided thousands of dollars in improper entertainment to Kang and his girlfriend, concealing the expenses through falsified expense reports and lying to their employer’s internal investigators. The court found Paulsen liable for aiding and abetting violations of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act, as well as Rule 10b-5, due to his knowledge of the illegal quid pro quo arrangement that directed $50 billion in fund business to their broker-dealer. The SEC seeks a permanent injunction and civil penalties, following prior final judgments against Kang and Kelley. The case, litigated by the SEC’s Public Finance Abuse Unit, underscores enforcement against corruption in public pension fund investment decisions.
Exhibits & Attached Documents (1)
Extracted insights
- $50.00B $50 billion ≥$1B
- company a pay-to-play scheme involving the new york state common retirement fund
- person judge paul g. gardephe
- company pay-to-play scheme involving the new york state common retirement fund
- John A. Paulsen aided and abetted a pay-to-play scheme involving the New York State Common Retirement Fund
- SEC Wins Virtual Bench Trial Against Analyst Charged with Aiding & Abetting New York Pension Fund Pay-To-Play Scheme
- Judge Paul G. Gardephe found John A. Paulsen, a former managing director and fixed income research analyst at a registered broker-dealer, aided and abetted a pay-to-play scheme involving the New York State Common Retirement Fund.
- John A. Paulsen aided and abetted a pay-to-play scheme involving the New York State Common Retirement Fund.
- John A. Paulsen aided and abetted a pay-to-play scheme involving the New York State Common Retirement Fund
- John A. Paulsen aided and abetted a pay-to-play scheme involving the New York State Common Retirement Fund
- John A. Paulsen aided and abetted a pay-to-play scheme involving the New York State Common Retirement Fund
- John A. Paulsen aided and abetted pay-to-play scheme involving New York State Common Retirement Fund
- John A. Paulsen charged with aiding and abetting pay-to-play scheme
- Judge Paul G. Gardephe found John A. Paulsen guilty of aiding and abetting
- SEC won virtual bench trial against John A. Paulsen
- John A. Paulsen was former managing director and fixed income research analyst
- New York State Common Retirement Fund involved in pay-to-play scheme
- SEC wins virtual bench trial against analyst John A. Paulsen
- Judge Paul G. Gardephe found John A. Paulsen aided and abetted a pay-to-play scheme involving the New York State Common Retirement Fund
- John A. Paulsen aided and abetted pay-to-play scheme involving the New York State Common Retirement Fund
- John A. Paulsen was former managing director and fixed income research analyst at a registered broker-dealer
- Securities and Exchange Commission v. John A. Paulsen filed July 26, 2018
- Litigation Release No. 24953 dated October 27, 2020
- SEC wins virtual bench trial
- John A. Paulsen aided and abetted pay-to-play scheme
- John A. Paulsen was former managing director and fixed income research analyst
- Judge Paul G. Gardephe found John A. Paulsen aided and abetted a pay-to-play scheme
- pay-to-play scheme involved New York State Common Retirement Fund
- John A. Paulsen aided and abetted pay-to-play scheme
- John A. Paulsen found guilty by Judge Paul G. Gardephe
- Judge Paul G. Gardephe found John A. Paulsen guilty
- Securities and Exchange Commission wins virtual bench trial
- John A. Paulsen charged with aiding and abetting New York Pension Fund pay-to-play scheme
SEC Wins Virtual Bench Trial Against Analyst Charged with Aiding & Abetting New York Pension Fund Pay-To-Play Scheme Litigation Release No. 24953 / October 27, 2020 Securities and Exchange Commission v. John A. Paulsen, No. 18-civ-6718 (S.D.N.Y. filed July 26, 2018) On October 23, 2020, Judge Paul G. Gardephe of the United States District Court for the Southern District of New York found that John A. Paulsen, a former managing director and fixed income research analyst at a registered broker-dealer, aided and abetted a pay-to-play scheme involving the New York State Common Retirement Fund. The 3-day bench trial, which began on July 15, 2020, was conducted remotely pursuant to the parties' stipulation. The court found that, from early 2014 until February 2016, Navnoor S. Kang was the Fund's Director of Fixed Income, with investment responsibility for approximately $50 billion of the Fund's assets. Kang used his position at the Fund to solicit and receive improper entertainment from Paulsen and Deborah D. Kelley, a registered representative at the broker-dealer. In exchange, Kang directed a significant amount of state business to the broker-dealer, generating sizable commissions. The court further found that although Kang told Paulsen and Kelley that the Fund had very strict rules that prohibited him from accepting anything from Paulsen, Paulsen and Kelley spent thousands of dollars entertaining Kang and his girlfriend. Paulsen and Kelley then sought reimbursement of those expenses from the broker-dealer, and submited false expense reports which concealed the fact they had entertained Kang on the trip. Later, when the broker-dealer discovered inconsistencies in the expense reports and began an internal investigation, Paulsen and Kelley conspired to lie, and did lie, to the broker-dealer's internal investigators. The court concluded that Paulsen lied because he understood that Kang and Kelley were engaged in an illegal quid pro quo relationship. The court found Paulsen liable on all counts, finding that he aided and abetted Kang and Kelley's violations of the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The SEC is seeking a permanent injunction and civil penalties. The SEC previously obtained final judgments against Kang, Kelley, and another individual in connection with this conduct. The SEC's claims, which were originally filed in July 2018, are being litigated by John E. Birkenheier, Alyssa A. Qualls, and Public Finance Abuse Unit members Brian Fagel and Eric Celauro. The case is being supervised by LeeAnn Gaunt, Chief of the Public Finance Abuse Unit. SEC Complaint
SEC Wins Virtual Bench Trial Against Analyst Charged with Aiding & Abetting New York Pension Fund Pay-To-Play Scheme Litigation Release No. 24953 / October 27, 2020 Securities and Exchange Commission v. John A. Paulsen, No. 18-civ-6718 (S.D.N.Y. filed July 26, 2018) On October 23, 2020, Judge Paul G. Gardephe of the United States District Court for the Southern District of New York found that John A. Paulsen, a former managing director and fixed income research analyst at a registered broker-dealer, aided and abetted a pay-to-play scheme involving the New York State Common Retirement Fund. The 3-day bench trial, which began on July 15, 2020, was conducted remotely pursuant to the parties' stipulation. The court found that, from early 2014 until February 2016, Navnoor S. Kang was the Fund's Director of Fixed Income, with investment responsibility for approximately $50 billion of the Fund's assets. Kang used his position at the Fund to solicit and receive improper entertainment from Paulsen and Deborah D. Kelley, a registered representative at the broker-dealer. In exchange, Kang directed a significant amount of state business to the broker-dealer, generating sizable commissions. The court further found that although Kang told Paulsen and Kelley that the Fund had very strict rules that prohibited him from accepting anything from Paulsen, Paulsen and Kelley spent thousands of dollars entertaining Kang and his girlfriend. Paulsen and Kelley then sought reimbursement of those expenses from the broker-dealer, and submited false expense reports which concealed the fact they had entertained Kang on the trip. Later, when the broker-dealer discovered inconsistencies in the expense reports and began an internal investigation, Paulsen and Kelley conspired to lie, and did lie, to the broker-dealer's internal investigators. The court concluded that Paulsen lied because he understood that Kang and Kelley were engaged in an illegal quid pro quo relationship. The court found Paulsen liable on all counts, finding that he aided and abetted Kang and Kelley's violations of the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The SEC is seeking a permanent injunction and civil penalties. The SEC previously obtained final judgments against Kang, Kelley, and another individual in connection with this conduct. The SEC's claims, which were originally filed in July 2018, are being litigated by John E. Birkenheier, Alyssa A. Qualls, and Public Finance Abuse Unit members Brian Fagel and Eric Celauro. The case is being supervised by LeeAnn Gaunt, Chief of the Public Finance Abuse Unit. SEC Complaint