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Audit: Office buys put 1 broker ahead of rest

by David Smith | May 21, 2013 at 4:33 a.m.

Steele Vincent Stephens, an investment broker who has sold bonds to Arkansas’ treasurer’s office, has had one major client in the past five years - the state of Arkansas - the head of the state’s Securities Department said Monday.

In the past five years, Stephens has sold $1.69 billion in bonds to the treasurer’s office, according to legislative auditors who examined the treasurer’s books. That is more than double the amount that the office, headed by state Treasurer Martha Shoffner, has purchased from any other broker, the audit disclosed.

That total includes sales in 2008 and 2009, when Stephens worked for Apple Tree Investments of Little Rock, to the present, including his work at St. Bernard Financial Services of Russellville. Stephens began working for St. Bernard in June 2009.

“We’re certainly looking into the transactions between the state and St. Bernard that were referenced in the legislative audit,” said Heath Abshure, commissioner of the Arkansas Securities Department.

But now Abshure wants to know which bond broker the FBI cited as a confidential informant in the federal criminal complaint it filed Monday against Shoffner in U.S. District Court in Little Rock.

Robert Keenan, chief executive officer of St. Bernard Financial Services, said Stephens told him that “he wasn’t involved” in giving money to Shoffner.

“I believe him, but reading the complaint raises more questions than it answered,” Keenan said. “So as of [Monday afternoon], I don’t know what to think.”

The criminal complaint claims that Shoffner received multiple $6,000 cash payments in return for funneling bond business to a bond broker identified only as “CHS1,” for confidential human source 1.

The complaint says the broker had invested the largest part of Arkansas’ $1.5 billion bond portfolio and had been given unprecedented access to details about “the entirety of the state’s bond portfolio.”

“CHS1 has been given immunity in exchange for his/her cooperation in this case,” the FBI’s criminal complaint states.

Neither the U.S. attorney’s office nor the FBI would identify the confidential informant Monday.

Any Arkansas licensed investment broker who may receive immunity from the FBI will not be immune from administrative action by the Arkansas Securities Department, Abshure said.

Finding out who was involved is “a big priority,” Abshure said.

He wants to know whether the money paid to Shoffner came from an agent’s personal account or from a firm.

“I’m going to start dragging in agents, the most likely suspects,” Abshure said. “I have some ideas in my head who I think it is, but I certainly wouldn’t want to say anything until it is clear.

“I’m going to be rather angry with the FBI if they don’t cooperate,” Abshure said. “We’ve certainly supplied them with a lot of our analysis and our information. And if they all of a sudden clam up, I’m going to hit the fan.

“I’m also very, very interested if what I have is a rogue broker out there doing it or whether [the employer had knowledge] of what was going on.”

Steele Stephens still is employed by St. Bernard Financial Services, Keenan said. Steve Stephens, who is Steele Stephens’ father, also is employed by the firm, Keenan said.

“Neither my firm or myself has ever given a penny to Martha Shoffner or her campaign,” Keenan said. “The only payments that we are aware of that [Steele] Stephens made to Treasurer Shoffner was a campaign contribution that he asked for permission to give to her and I approved.”

Steele Stephens, who has no connection to the Little Rock investment firm Stephens Inc., did not respond to a phone call and an e-mail on Monday seeking comment.

Stephens became a licensed broker in Arkansas in 1985 when he started working with Boykin Sparks & Associates of Little Rock, according to his history on file with the Financial Industry Regulatory Authority, a private corporation that is a regulatory organization of the securities industry.

He has had no customer complaints filed against him in the 28 years he has been an investment dealer.

He passed the Arkansas securities exam in 1985 and later passed three general industry product exams and a branch-manager exam.

Information for this article was contributed by Michael Wickline and Sarah D. Wire of the Arkansas Democrat-Gazette.

Front Section, Pages 5 on 05/21/2013

Print Headline: Audit: Office buys put 1 broker ahead of rest


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