According to a complaint filed in federal court by the Securities and Exchange Commission, McGinn, Smith & Co Inc, sold about $120 million in unregistered debt offerings.
The SEC claims Chairman Timothy McGinn and President David Smith used the proceeds to meet payroll, hire strippers for a “sexually themed cruise” and other personal activities.
“McGinn and Smith deceived investors about the true purpose behind these offerings,” said Andrew Calamari, associate director of the SEC’s New York regional office.
The SEC’s filing comes a day after the Financial Industry Regulatory Authority (FINRA) filed a securities complaint accusing the firm and Smith with fraud.
The firm and Smith misused investor funds and violated securities registration rules, FINRA said. Smith was charged with misleading investors.
Smith and McGinn were also charged with providing FINRA staff with falsified documents.
Using investor funds to hire strippers and taking cruises to exotic ports-of-call aren’t the type of daily business operations the SEC will turn a blind eye to.
Investors should be outraged with McGinn and Smith, especially if they weren’t invited to join them on the sex cruises.
