A pair of former bankers and a former New York State pension official previously convicted of criminal fraud will avoid further penalties under a civil order issued by a federal judge in New York this week.
The three orders issued Dec. 23 by Judge Paul G. Gardephe bring to a close the Securities and Exchange Commission enforcement action against Navnoor Kang, Deborah Kelley and Gregg Schonhorn. Kang was the former director of fixed income for the New York State Common Retirement Fund, while Kelley and Schonhorn were brokers charged with working with Kang in a years-long pay-to-play scheme. All three pleaded guilty to criminal charges in 2017, and Kang was sentenced to 21 months in prison.
While the trio were technically ordered to pay more than $4 million in disgorgement, under the terms of their settlements their obligations were “deemed satisfied in full” by the orders of restitution and forfeitures imposed on them in their criminal proceeding.
The SEC similarly agreed to forego the pursuit of any civil monetary penalties against the three defendants owing to their criminal convictions.
The charges brought by both the SEC and the Justice Department involved the two brokers providing Kang with bribes of “at least $180,000” in various benefits between 2014 and 2016, including travel and entertainment in exchange for his influence in awarding fixed income business to their firms.
Financial Industry Regulatory Authority documents show that Kelley worked at Birmingham, Alabama-based Sterne, Agee & Leach Inc. and St. Louis-based Stifel Nicolaus & Co. during the period covered by the complaint, and Schonhorn worked for Memphis-based FTN Financial Securities Corp.
Kang
The orders signed by the judge this week permanently enjoin all three defendants from committing any further violations of the federal securities laws, and Kang’s order also bars him from “participating in any decisions involving investments in securities by public pensions as a trustee, officer, employee or agent.”
