WASHINGTON -- Two officers of the defunct Swink & Co., have been charged with violating the anti-fraud provisions of the securities laws in connection with trades of Treasury securities made just before the Little Rock broker-dealer went into liquidation in late 1989, the Securities and Exchange Commission announced yesterday.
Jimmy Dale Swink Sr., the firm's former chairman, and Samuel C. Jolly, the firm's former manager of government trading, were charged in federal court in Little Rock on Tuesday with failing or refusing to pay for over $260 million of 30-year Treasury bonds they bought from four broker-dealers between Dec. 18 and 26, 1989, according to documents released by the SEC.
The SEC said the so-called free-riding scheme resulted in losses of $2.4 million for the four firms, which the agency did not name.
The SEC complaint also charged that the two officials of Swink -- which was known for underwriting a number of questionable municipal deals before it went out of business -- disseminated false and misleading financial data regarding the firm and made false and misleading statements that the government securities trades were for institutional customers to induce broker-dealers to accept their orders.
The SEC also charged that Mr. Swink, his son, Jimmy Dale Swink Jr., who headed the firm's bond department, and two employees, Louis J. Pagillo and Gary F. Granger, aided the firm's violations of the net capital, book, and record keeping provisions of the securities laws on several, occasions between March 1988 and December 1989.
The firm ended 18 years of business in late December 1989 after reportedly losing about $1.2 million trading government bonds when the Treasury's 30-year bond plummeted a point and a quarter amid speculation the Federal Reserve would delay a move to ease interest rates. The firm formally was expelled from the securities business by the National Association of Securities Dealers last October for allegedly "scheming to defraud" its clearing firm and the elder Mr. Swink was fined $50,000 and temporarily suspended from acting as an official in the securities business for violating net capital and record keeping rules.
