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BOK Financial to Pay $1.6M for Failing "Gatekeeper Role"
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A subsidiary of Oklahoma-based BOK Financial Corporation (BOKF - Free Report) has agreed to settle charges of the Securities and Exchange Commission (SEC) by paying more than $1.6 million.
Per the regulator, BOK Financial’s unit failed in its “gatekeeping role” as indenture trustee, having concealed material problems and red flags from investors in municipal bond offerings related to purchase and renovation of senior living facilities.
The regulator also filed a complaint in a federal court in Newark, NJ against Marrien Neilson, the company’s former senior vice-president. Neilson was charged with failure to properly oversee the municipal bond scheme by an Atlanta-based businessman, Christopher F. Brogdon.
Brogdon has been charged separately for misusing investor funds raised to purchase and renovate senior living facilities.
Why the Charges?
According to the SEC, BOK Financial and Neilson were aware of Brogdon’s fraudulent acts of withdrawing money from reserve funds for the bond offerings and not replenishing the reserve account, along with failure to file annual financial statements for the offerings.
They also knew that the nursing home facilities put up as collateral for one of the bond offerings had been closed for years.
Instead of standing up for the bondholders and notifying them, as required of their “gatekeeping role” as indenture trustee and dissemination agent for Brogdon’s bond offerings, they chose to remain silent. Neilson had apparently warned others that disclosure of such acts and other problems could materially impact the company’s future business and fees from Brogdon, and result in regulatory issues for bond underwriters.
According to the SEC, Brogdon amassed nearly $190 million from several municipal bond and private placement offerings for nursing homes, assisted-living facilities and other retirement community projects. Further, he secretly commingled investor funds and diverted their money to other business ventures and personal expenses.
The Consequences
BOK Financial has agreed to pay disgorgement of $984,200.73 in fees it collected from its work with Brogdon, along with $83,500 in interest and a $600,000 in penalty. The company did not admit nor denied the charges.
Neilson has been allegedly held responsible for the failure of the company’s corporate trust department. She has been terminated from her role following an internal investigation.
Brogdon has been ordered to repay $85 million to investors by the court. Further, he has been prohibited from serving as an officer or director to any public company in the future.
BOK Financial’s stock declined about 0.3% to close at $69.11 on Sep 9, after the SEC announced the charges against the company.
Currently, BOK Financial Corporation carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the same space include Republic Bancorp, Inc (RBCAA - Free Report) sporting a Zacks Rank #1(Strong Buy) and BancFirst Corporation (BANF - Free Report) , Southwest Bancorp , both carrying a Zacks Rank #2 (Buy).You can see the complete list of today’s Zacks #1 Rank stocks here.
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BOK Financial to Pay $1.6M for Failing "Gatekeeper Role"
A subsidiary of Oklahoma-based BOK Financial Corporation (BOKF - Free Report) has agreed to settle charges of the Securities and Exchange Commission (SEC) by paying more than $1.6 million.
Per the regulator, BOK Financial’s unit failed in its “gatekeeping role” as indenture trustee, having concealed material problems and red flags from investors in municipal bond offerings related to purchase and renovation of senior living facilities.
The regulator also filed a complaint in a federal court in Newark, NJ against Marrien Neilson, the company’s former senior vice-president. Neilson was charged with failure to properly oversee the municipal bond scheme by an Atlanta-based businessman, Christopher F. Brogdon.
Brogdon has been charged separately for misusing investor funds raised to purchase and renovate senior living facilities.
Why the Charges?
According to the SEC, BOK Financial and Neilson were aware of Brogdon’s fraudulent acts of withdrawing money from reserve funds for the bond offerings and not replenishing the reserve account, along with failure to file annual financial statements for the offerings.
They also knew that the nursing home facilities put up as collateral for one of the bond offerings had been closed for years.
Instead of standing up for the bondholders and notifying them, as required of their “gatekeeping role” as indenture trustee and dissemination agent for Brogdon’s bond offerings, they chose to remain silent. Neilson had apparently warned others that disclosure of such acts and other problems could materially impact the company’s future business and fees from Brogdon, and result in regulatory issues for bond underwriters.
According to the SEC, Brogdon amassed nearly $190 million from several municipal bond and private placement offerings for nursing homes, assisted-living facilities and other retirement community projects. Further, he secretly commingled investor funds and diverted their money to other business ventures and personal expenses.
The Consequences
BOK Financial has agreed to pay disgorgement of $984,200.73 in fees it collected from its work with Brogdon, along with $83,500 in interest and a $600,000 in penalty. The company did not admit nor denied the charges.
Neilson has been allegedly held responsible for the failure of the company’s corporate trust department. She has been terminated from her role following an internal investigation.
Brogdon has been ordered to repay $85 million to investors by the court. Further, he has been prohibited from serving as an officer or director to any public company in the future.
BOK Financial’s stock declined about 0.3% to close at $69.11 on Sep 9, after the SEC announced the charges against the company.
Currently, BOK Financial Corporation carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the same space include Republic Bancorp, Inc (RBCAA - Free Report) sporting a Zacks Rank #1(Strong Buy) and BancFirst Corporation (BANF - Free Report) , Southwest Bancorp , both carrying a Zacks Rank #2 (Buy).You can see the complete list of today’s Zacks #1 Rank stocks here.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>