The Arkansas Securities Department filed a complaint Thursday in Pulaski County Circuit Court against William David Crain, a former investment adviser with St. Bernard Financial Services of Russellville, seeking to enforce a subpoena against him.
The subpoena required Crain, who ran a St. Bernard office in Little Rock, to provide customer files on Gary and Gregory Accord, Marie Head, Kenneth and Fay Johnson, Mitzi Roberts, Kent and Betty Hyde, Dain Matthey and Lyndon Miller.Crain was also required to provide a copy of his office’s advertising, correspondence and complaint files.
The subpoena was served March 21, but Crain has refused to respond, the Securities Department complaint said.
In March, the department filed a complaint seeking to revoke or suspend the license of St. Bernard and its top executive, Robert Keenan, claiming the firm and Keenan did not properly supervise Steele Stephens. Stephens was a broker for St. Bernard who testified this year in a criminal action against former state Treasurer Martha Shoffner.
Stephens testified that he gave $36,000 to Shoffner over 2½ years and was rewarded with a large share of the state’s bond business. He earned about $2.5 million in commissions from the bond business, Stephens acknowledged.
Shoffner was convicted last month on charges of extortion and bribery.
Thursday’s complaint doesn’t elaborate on why the Securities Department wants Crain’s records. But on Feb. 27, the department issued a temporary order for the suspension of Crain’s license.
The day before, Crain had sent the department an email that said he was surrendering all his securities licenses.
The department first sought an examination of Crain’s office in January. Crain, who is also a tax accountant, asked the department to delay the examination until after the tax season.
He no longer has his client files, Crain said in an interview Thursday. When he surrendered his licenses, he turned those files over to St. Bernard, Crain said.
When the department first sought to examine Crain’s office in January, it indicated the examination would be brief and include “pretty generic” questions, according to email messages included in the February complaint against Crain.
When he relinquished his license, the Securities Department “went ballistic,” Crain said.
“I’ve been running two one-person businesses [taxes and securities] for 10 years and have been the guardian for my [ailing] mother for over eight years,” Crain said. “I have been worn out, just absolutely exhausted. And they knew that.”
Arkansas law allows the department to conduct an examination, but it has to be in a reasonable time, Crain said.
“I said it’s not reasonable to demand an immediate examination for someone who has two one-person businesses and a dying mother,” Crain said.
Scott Freydl, a Securities Department attorney, declined to comment.
Heath Abshure, commissioner of the department, said he does not know the details of the Crain investigation. The commissioner normally isn’t involved in the department’s investigations, Abshure said.
“But as a regulated entity, we shouldn’t even have to subpoena Mr. Crain for documents,” Abshure said. “He’s required to comply with our request for information. But he refused to do that. We’re still waiting on that information. So we took the extra step of sending him a subpoena requesting the documents. He didn’t comply with that either. So the staff filed the complaint in circuit court.”
Business, Pages 27 on 04/11/2014