WASHINGTON — The Securities and Exchange Commission has barred ex-Wachovia Securities LLC broker Guy P. Riordan from associating with any broker or dealer, and ordered him to pay a $500,000 penalty and to disgorge almost $938,354 in ill-gotten gains and interest for securities fraud violations stemming from a pay-to-play scheme involving the former treasurer of New Mexico.
The SEC imposed the sanctions in an order issued Friday that found Riordan violated antifraud provisions of the securities laws by making secret cash kickbacks to former treasurer Michael Montoya in exchange for obtaining state investment business from 1999 through 2002.
Montoya, who testified against Riordan, was criminally convicted of extortion and sentenced to forty months in prison. Riordan is retired.
It is not clear whether Riordan will appeal the SEC’s order. He has 60 calendar days to file an appeal with either the U.S. Court of Appeals for the District of Columbia or the Court of Appeals for the Tenth Circuit in Denver.
Michael K. Wolensky, a lawyer at Schiff Hardin LLP in Atlanta representing Riordan, said Friday: “Obviously I am disappointed in the result and that the commission was so willing to overlook obvious errors by the ALJ (administrative law judge) affecting Mr. Riordan’s fundamental rights.”
The ALJ limited the evidence that Riordan could introduce, among other things, Wolensky said.
The SEC’s order is in response to Riordan’s appeal of an initial decision against him that was issued by Brenda Murray, the SEC’s chief ALJ, in July 2008. The SEC slightly reduced the amount of ill-gotten gains that Murray had ordered Riordan to disgorge, but the prejudgment interest he owed increased over time.
In the 39-page order, the SEC concluded that Riordan’s conduct was egregious and “contributed to the corruption of a public official.” Riordan “profited substantially” at the expense of New Mexico citizens, The SEC said the sanctions should serve as a warning to other market participants tempted to engage in pay-to-play schemes.