INVESTORS: Former H.D. Vest Investment Services broker Penny Gail Flippen was named in a complaint filed by the SEC alleging operation of a massive Ponzi scheme.
Penny Gail Flippen (CRD#: 2742088) was registered as a broker with H.D. Vest Investment Services from 1998 until 2013. Flippen does not have any other securities experience.
Flippen has four disclosures on her BrokerCheck report. One customer dispute filed against Flippen was denied.
June 2022 Civil Judgment
Initiated By: United States Securities and Exchange Commission
Allegations: Plaintiff, the United States Securities and Exchange Commission (“Commission” or “SEC”), for its Complaint against Michael Mooney (“Mooney”), Britt Flippen (“Flippen”), and Penny Flippen (“Flippen”)- the Defendants in this case – alleges that for more than a decade, John Woods (“Woods”) ran a massive Ponzi scheme, raising over $100 million from more than 400 investors nationwide to invest in Horizon Private Equity, III, LLC (“Horizon III”).
According to the complaint, Mooney, Flippen, and Flippen-each a former investment adviser representative of Livingston Group Asset Management Company d/b/a Southport Capital (Southport)- recommended that their clients invest or maintain at least $62 million in Horizon Private Equity, III, LLC (Horizon), a private investment fund controlled entirely by John J. Woods, Southport’s former owner and manager.
In August 2021, the SEC charged Woods and Southport with multiple counts of securities fraud for operating Horizon as a Ponzi scheme. Many of the defendants’ clients were elderly and inexperienced investors who communicated that they wanted safe investment opportunities for their assets, a large percentage of which were earmarked for retirement. Nevertheless, the defendants, who each received undisclosed compensation from Horizon, recommended that their clients invest in the fund based solely on Woods’ unsubstantiated claims about Horizon’s investment objectives, source of returns, and operations.
The defendants also allegedly ignored significant red flags, such as Woods instructing the defendants not to use their Southport email addresses when communicating about Horizon. The complaint also states that the defendants falsely told their clients that Horizon would use the funds they invested to purchase safe investments; that Horizon would pay them a guaranteed rate of return; and that they could get their principal back without penalty.
In reality, Horizon earned very few profits from investments, and investor proceeds were used primarily to make principal and interest payments to earlier Horizon investors and to fund Woods’ personal projects, such as his purchase of a minor league baseball team. As a result of her conduct alleged in the complaint, Flippen, engaged in acts or practices, or aided and abetted, and, unless restrained and enjoined by this Court, will continue to engage in acts and practices that constitute and will constitute, or will aid, abet and cause violations of Sections 17(a)(1), 17(a)(2), and 17(a)(3) of the Securities Act of 1933; Section 10(b) of the Securities Exchange Act of 1934 and subsections (a), (b), and (c) of Rule 10b-5 thereunder; and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940.
September 2015 Regulatory Judgment
Initiated By: FINRA
Allegations: Without admitting or denying the findings, Flippen consented to the sanctions and to the entry of findings that she falsely represented that she was the registered representative of her member firm on accounts serviced by another registered representative and held by different firm customers. Flippen did so in order to permit the other registered representative to make recommendations and earn commissions on transactions with those customers, all of whom were residents of states in which the representative was denied registration due to unrelated customer complaints.
Although Flippen occasionally placed trades for customers, she did so following the representative’s instructions and did not personally make any recommendations to or transact business with firm customers. The representative received all commissions on customer trading, and paid Flippen a straight salary with occasional bonuses.
Flippen admittedly only registered in the states because the representative was unsuccessful in obtaining his registrations. The findings stated that Flippen caused her firm to create and maintain inaccurate books and records by falsely representing on certain firm records, including customer account statements, that she was the registered representative with respect to these accounts.
Resolution: Acceptance, Waiver & Consent (AWC)
Sanctions: Civil and Administrative Penalty(ies)/Fine(s)
Registration Capacities Affected: any capacity
Duration: 30 business days
Start Date: 9/21/2015
End Date: 10/30/2015
July 2012 Customer Dispute
Allegations: Clients alleged that representatives did not recommend diversification of position in stock client received from company client worked for.
Settlement Amount: $125,000.00
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