NEW YORK (AP) — The former chief executive and an employee of a broker-dealer firm were arrested Monday on charges alleging they submitted false reports to U.S. regulators and then lied to try to cover it up.
Alan Seidel, the former CEO of Seidel & Co. LLC, and Benjamin Mekaway were arrested on charges contained in a criminal complaint filed in federal court in Manhattan.
It was not immediately clear who their attorneys were, and a representative to comment on their behalf was not available Monday.
Seidel & Co. was a Manhattan-based firm registered with the Securities and Exchange Commission that acted primarily as an intermediary between institutional broker-dealers trading bonds of various types, according to a release.
Federal authorities say the men began in late 2016 submitting false monthly reports about the firm's net capital to make it seem it did not have more debt than the SEC permitted. If it fell short, the firm would become subject to the suspension of revocation of its registration.
They said the firm falsely inflated the balance of its brokerage account, with Merkaway submitting a forged bank statement to an entity that prepared and submitted its reports to the SEC. Authorities also said Seidel falsely recorded a $1 million loan as a capital contribution when it should have been recorded as a liability.
Prosecutors said that Seidel made false statements to the SEC's exam staff regarding the $1 million loan and that Mekaway tried in August 2018 to obstruct a probe by the SEC's Division of Enforcement into Seidel & Co.'s misconduct by failing to produce relevant documents and emails.
“In order to protect investors and our markets, the SEC must be able to rely on the accuracy of the books and records and regulatory filings of the firms it oversees," U.S. Attorney Geoffrey S. Berman said in a release.
He said the men "threatened to undermine the SEC’s vital mission” through their deceptions.
Seidel, 73, of Long Beach, and Mekaway, 37, of Hazlet, were each charged with conspiracy, falsifying books and records and lying to the SEC.
Besides the criminal charges, the men face civil charges filed Monday by the SEC.