In re SIGNATOR INVESTORS

 
 
 
 UNITED STATES OF AMERICA 
 Before the 
 SECURITIES AND EXCHANGE COMMISSION 
 
 
SECURITIES EXCHANGE ACT OF 1934 
Release No. 75690 / August 13, 2015 
 
INVESTMENT ADVISERS ACT OF 1940 
Release No. 4170 / August 13, 2015 
 
ADMINISTRATIVE PROCEEDING 
File No. 3-16753 
 
In the Matter of 
 
SIGNATOR INVESTORS, 
INC. and GREGORY J. 
MITCHELL,  
 
Respondents. 
 
 
 
 
ORDER INSTITUTING ADMINISTRATIVE 
PROCEEDINGS PURSUANT TO SECTION 
15(b) OF THE SECURITIES EXCHANGE 
ACT OF 1934 AND SECTIONS 203(e) AND 
203(f) OF THE INVESTMENT ADVISERS 
ACT OF 1940, MAKING FINDINGS, AND 
IMPOSING REMEDIAL SANCTIONS  
   
 
I. 
 
 The Securities and Exchange Commission (“Commission”) deems it appropriate and in the 
public interest that public administrative proceedings be, and hereby are, instituted pursuant to 
Section 15(b) of the Securities Exchange Act of 1934 (“Exchange Act”), and Sections 203(e) and 
203(f) of the Investment Advisers Act of 1940 (“Advisers Act”) against Signator Investors, Inc. 
(“Signator”) and  Gregory J. Mitchell (“Mitchell”), (collectively, “Respondents”).    
 
II. 
 
 In anticipation of the institution of these proceedings, Respondents have each submitted 
Offers of Settlement (the “Offers”) which the Commission has determined to accept.  Solely for 
the purpose of these proceedings and any other proceedings brought by or on behalf of the 
Commission, or to which the Commission is a party, and without admitting or denying the findings  
herein, except as to the Commission’s jurisdiction over them and the subject matter of these 
proceedings, which are admitted, and except as provided herein in Section V, Respondents consent 

 
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to the entry of this Order Instituting Administrative Proceedings, Pursuant to Section 15(b) of the 
Securities Exchange Act of 1934 and Sections 203(e) and 203(f) of the Investment Advisers Act of 
1940, Making Findings, and Imposing Remedial Sanctions (“Order”), as set forth below.   
 
III. 
 
 On the basis of this Order and Respondents’ Offer, the Commission finds
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 that:  
 
Summary 
 
 These proceedings arise out of Respondents’ failure reasonably to supervise James R. 
Glover (“Glover”) and Cory D. Williams (“Williams”), former registered representatives and 
investment adviser representatives (collectively referred to as “financial representatives”) at 
Signator, with a view to preventing and detecting Glover’s and Williams’ violations of the federal 
securities laws.  While associated with Signator, from approximately May 1998 through May 2012, 
Glover conducted an offering fraud that defrauded at least 125 Signator advisory clients and 
brokerage customers (collectively, “Clients”) of approximately $13.5 million by soliciting them to 
invest in Colonial Tidewater Realty Income Partners, LLC (“Colonial Tidewater”), a security not 
approved for sale by Signator representatives.  Glover made materially false and misleading 
statements regarding the financial health of Colonial Tidewater, the expected returns and risk of 
investing, and deceived investors by, among other things, creating the false impression that Colonial 
Tidewater was a Signator-approved investment.  Glover and Williams met with investors to discuss 
investment in Colonial Tidewater in Signator’s offices, maintained files reflecting Clients’ 
investments in Colonial Tidewater within the Signator offices, and provided many Clients with 
consolidated reports generated from Signator computer systems that included or attached false 
valuations of their Colonial Tidewater investments.   
 
 During the pendency of their fraud, Glover and Williams received undisclosed commissions 
from Colonial Tidewater totaling approximately $188,382.  Glover’s receipt of commissions from 
Colonial Tidewater represented a conflict of interest that he failed to disclose to his brokerage 
customers in connection with recommendations that they invest in Colonial Tidewater and to his 
advisory clients in connection with advisory relationships.  Williams similarly failed to disclose this 
conflict of interest to his advisory clients.   
 
 By engaging in the misconduct described above, Glover violated Section 17(a) of the 
Securities Act of 1933, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and Sections 
206(1) and 206(2) of the Advisers Act.  Williams violated Sections 206(1) and 206(2) of the 
Advisers Act.   
  
 Signator did not have policies and procedures reasonably designed to prevent and detect 
Glover’s and Williams’ misuse of Signator’s consolidated reports, known as Albridge reports, to 
                                                 
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  The findings herein are made pursuant to Respondents’ Offers of Settlement and are not 
binding on any other person or entity in this or any other proceeding. 
 

 
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perpetrate a securities fraud upon their Clients.  Specifically, Signator had no policies explicitly 
governing the creation, use, and review of Albridge reports.  These consolidated reports showed that 
a substantial number of Signator’s Clients serviced by Glover and Williams were invested in 
Colonial Tidewater, a security not offered or approved by Signator.  Had Signator had reasonable 
policies and procedures governing Albridge reports, it would have likely uncovered Glover’s and 
Williams’ fraud.   
    
 Beginning in January 2009, Gregory Mitchell was responsible for supervising Glover and 
Williams.  Mitchell failed reasonably to implement Signator’s policies and procedures for 
conducting reviews of files of brokerage customers and advisory clients (“client file reviews”).  
Glover and Williams’ Client files contained correspondence, emails, and documents authorizing the 
transfer of funds from Signator-approved investments to Colonial Tidewater as well as Albridge 
reports.  But Mitchell ignored key components of Signator’s file review policies.  Had Mitchell 
reasonably implemented Signator’s policies and procedures regarding client file reviews, the fraud 
likely would have been detected.  As a result of Mitchell’s failure to implement Signator’s policies 
and procedures for properly conducting client file reviews, Mitchell failed reasonably to supervise 
Glover and Williams with a view to preventing and detecting their violations of the federal 
securities laws.   
 
Respondents 
 
 1. Signator Investors, Inc., headquartered in Boston, Massachusetts, is a registered 
broker-dealer and investment adviser.   
 
 2. Gregory J. Mitchell, age 65, resides in Leesburg, Virginia.  Beginning in 
approximately January 2004, he was the Director of Compliance for Signator’s Vienna, Virginia 
Office of Supervisory Jurisdiction (“Vienna OSJ”).  In January 2009, Mitchell also became 
Director of Compliance for Signator’s Towson, Maryland Office of Supervisory Jurisdiction 
(“Towson OSJ”).  During the relevant time period, Mitchell was responsible for several 
supervisory functions, including client file reviews, and beginning in January 2009, was a 
designated supervisor for Glover and Williams with respect to their brokerage and advisory 
business.  In December 2014, Mitchell relinquished his supervisory responsibilities and was a 
registered representative and investment adviser representative in the Vienna OSJ until June 2015.  
He holds series 1, 7, 24, 51, 63, and 65.     
 
Other Relevant Persons and Entities 
 
 3. James R. Glover, age 73, is a resident of White Hall, Maryland.  He was a registered 
representative and investment adviser representative in Signator’s Towson OSJ from May 1, 1998 
through May 11, 2012, when he was permitted to resign.  He held series 6, 22, 63, and 65.   
 
4. Cory D. Williams, age 43, is a resident of Monkton, Maryland.  He was a registered 
representative and investment adviser representative in Signator’s Towson OSJ from April 30, 
1998 through March 7, 2013, when his association with Signator was terminated.  From April 2013 
through September 2013, Williams was a registered representative and investment adviser 

 
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representative associated with a broker-dealer and investment adviser registered with the 
Commission.  He holds series 6, 7, 63, and 65. 
 
5. Colonial Tidewater Realty Income Partners, LLC is a Maryland limited liability 
company that was formed on January 26, 1999.  Colonial Tidewater is not registered with the 
Commission.  Glover has been a managing member since April 1, 2004.  The company’s principal 
office is located in Conowingo, Maryland.  Colonial Tidewater owns and operates residential and 
commercial properties through its subsidiaries in Maryland, Pennsylvania, and New York.   
 
Background 
 
6. In May 1998, Glover and Williams joined Signator’s Towson OSJ.  The two had 
previously worked together at another broker-dealer located in Towson, where Williams had begun 
his career under Glover’s tutelage.  Glover and Williams provided various services to their shared 
group of Clients.  Some of these Clients were brokerage customers, some were advisory clients, 
and many had both brokerage and advisory relationships with Glover and Williams.  Together, 
Glover and Williams provided their Clients with a broad array of financial products in addition to 
brokerage and investment advisory services, including annuities, and long term care and life 
insurance.     
 
7. Glover is a co-managing member of Colonial Tidewater and was responsible for 
handling all investor relationships and solicitations.  From approximately January 1999 through 
May 2012, Glover solicited his Signator brokerage customers and advisory clients asking that they 
invest in partnership units issued by Colonial Tidewater, which was not a Signator-approved 
investment.  Ultimately, at least 125 of his Clients agreed to invest a total of approximately $13.5 
million.  Glover solicited these investments through myriad misrepresentations.  
 
8.   Glover offered units in Colonial Tidewater through a series of private placement 
memoranda (“PPM”).  According to the PPMs, the offering proceeds were to be used to invest, 
through Colonial Tidewater’s subsidiaries, in various forms of residential and commercial real 
estate.  Although at least some of the money raised from investors was used to invest in this 
manner, through the PPMs and written property reports provided to certain prospective investors, 
Glover misled investors about, among other things, the financial condition of Colonial Tidewater 
and its real estate holdings.  These documents provided grossly overstated property values, and 
even failed to disclose that certain properties had been lost to foreclosure or were facing 
foreclosure.   
 
9.   In addition, Glover made oral misrepresentations in order to entice Clients to invest.  
Glover represented to investors that Colonial Tidewater was a low risk investment that was suitable 
for all Clients, regardless of income or financial status.  He also falsely promised certain investors 
guaranteed rates of return, safety of principal, and liquidity.  Glover failed to disclose that it was 
unlikely that investors would be able to redeem their investment in light of the fact that many of 
Colonial Tidewater’s properties were highly mortgaged and were not income generating. 
 

 
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10. While the PPMs permitted Glover to receive fees as a managing member of 
Colonial Tidewater, Glover orally represented to many Clients that he was not receiving 
compensation for his work relating to Colonial Tidewater.  To the contrary, Glover and Williams 
were receiving commissions from Colonial Tidewater on a quarterly basis of approximately three 
percent of investment monies Glover solicited.  Glover and Williams split these commissions 
equally.  From 2005 through 2011, Glover and Williams received commissions totaling 
approximately $188,382.      
 
11. While Glover solicited Signator Clients to invest in Colonial Tidewater, Williams 
was aware of Glover’s solicitations and that Colonial Tidewater was not an authorized or approved 
Signator investment.  Following the Clients’ investments in Colonial Tidewater, Glover and 
Williams actively serviced Clients with respect to their investments in Colonial Tidewater.   They 
met with investors in the Towson OSJ, maintained Client files in the office relating to Colonial 
Tidewater, and most importantly, provided Clients with Albridge reports that reflected their 
Clients’ investments in Colonial Tidewater.  Williams failed to disclose to his advisory Clients his 
receipt of commissions associated with the Clients’ purchases of the partnership units issued by 
Colonial Tidewater.   
 
12. Glover, in conjunction with Williams, was able to conduct his fraud over a period 
of years by giving Clients the false impression that Colonial Tidewater was a Signator-approved 
investment, subject to all of the same requirements and oversight as its other financial products. 
 
13. Based on the conduct described above, Glover violated Section 17(a) of the 
Securities Act, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and Sections 206(1) 
and 206(2) of the Advisers Act, and Williams violated Sections 206(1) and 206(2) of the Advisers 
Act. 
 
Signator’s Failure to Have Reasonable Policies 
and Procedures Regarding Consolidated Reports 
 
14. During the relevant time period, Signator failed to have reasonable policies and 
procedures for the creation, use, and review of consolidated reports.  A “consolidated report” is a 
single document that combines information regarding most or all of a customer’s or client’s 
financial holdings, regardless of where those assets are held.  Beginning in 2004, Signator 
enabled its financial representatives to create consolidated reports, known as Albridge reports, 
using software licensed from Albridge Solutions, Inc.  Signator charged financial representatives 
a monthly fee to use the Albridge system.  Glover and Williams began using the Albridge system 
in approximately 2005.   
 
 15. The Albridge system enabled financial representatives to access electronic data to 
create, for distribution to customers and clients, a consolidated report showing a customer’s or 
client’s total holdings, including those within Signator brokerage accounts, Signator advised 
accounts, as well as certain third-party advised accounts, variable annuities, and insurance 
products.  The top of each page of an Albridge report listed the financial representative’s name, 
title, “Signator Investors, Inc.,” and the financial representative’s address and telephone number. 

 
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 16.  The Albridge system also had a manual entry function that permitted a financial 
representative to add information manually into the report.  For example, representatives could 
manually add investments and the purported value of such investments into a customer’s or client’s 
report.  The manual entry function was intended to allow the financial representative to include in 
the report other investments to provide the customer or client with a comprehensive view of his or 
her financial condition by including all holdings, whether or not they were held through Signator.   
 
 17. The Albridge system maintained by Signator allowed for the overwriting of old 
electronic reports and the periodic purging of such files.  Financial representatives largely treated 
Albridge reports like other documents shown to customers and clients, and put copies of the reports 
in client files.   
 
 18.   Signator understood the Albridge reports were being provided to customers and 
clients and was aware of the manual entry function and its use by financial representatives.   
    
 19. Notwithstanding its knowledge of the existence of the manual entry function in 
Albridge reports and that financial representatives used the function, Signator had no policies 
and procedures governing financial representatives’ creation, use, or dissemination of the reports.  
For example, Signator had no policies and procedures instructing financial representatives as to 
the content of Albridge reports, including what information could or could not be included. 
 
 20. Finally, Signator had no policy or procedure governing how the representative-
created Abridge reports were to be reviewed.  No one at Signator had responsibility for 
overseeing the content of Albridge reports or for reviewing the reports before Glover and 
Williams sent them to the Clients.  There was no review of manually entered data that was 
included in the reports.    
   
Signator’s Lack of Reasonable Policies 
and Procedures Led to Failure to Prevent or Detect the Fraud 
 
21. Glover and Williams frequently provided Signator Clients with Albridge reports 
reflecting investments purchased through Signator as well as their outside holdings in Colonial 
Tidewater.  The Colonial Tidewater investment was either included within a section of the report 
titled “Manual Accounts” or on a page attached to the back of the report, setting forth the purported 
amount of the investment.  
 
22. When Glover and Williams’ conduct came to light, the client files for Signator 
Clients they serviced contained at least 300 Albridge reports reflecting investments in Colonial 
Tidewater totaling millions of dollars.    
 
23.  The lack of reasonable policies and procedures governing the creation, use, and 
review of Albridge reports resulted in Signator’s failure to identify and prevent the fraud that was 
being committed by Glover and Williams.  If Signator had reasonable policies and procedures 
governing Albridge reports, Glover and Williams’ fraud likely would have been uncovered due to 

 
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the substantial number of their Clients investing in Colonial Tidewater and the sheer number of 
Albridge reports containing references to Colonial Tidewater.  Supervisory review of the reports 
would have highlighted a number of red flags that should have prompted follow-up with Glover 
and Williams regarding Colonial Tidewater, how they were marketing Colonial Tidewater to 
brokerage customers and advisory clients, and whether Glover and Williams had and disclosed any 
conflicts of interest, such as receipt of commissions.  
  
Signator Enhances Oversight of Consolidated Reports 
 
24. In March 2013, Signator hired a consultant to undertake a comprehensive review of 
its supervisory systems.  With the assistance of the consultant, Signator has reviewed, evaluated, 
and enhanced its supervisory and compliance systems, including by instituting formal training and 
written policies and procedures concerning the creation, use, and review of Albridge reports.  
Significant to the improvement of its systems, Signator also eliminated the manual entry function 
from the Albridge reports in 2014.   
 
Mitchell’s Failure to Reasonably Implement Signator’s Policies 
and Procedures Regarding Client File Reviews 
 
25. In relevant part, Signator’s policies and procedures required a supervisor to conduct 
two client file reviews each calendar year of each financial representative.  During the client file 
review, the supervisor selected a sampling of a financial representative’s files for review to ensure 
that the file was properly maintained and contained all required documentation. 
 
26. Beginning in 2009, Mitchell was responsible for conducting client file reviews for 
each financial representative in the Towson OSJ, including the files maintained for Signator 
Clients serviced by Glover and Williams.  Mitchell, who worked out of the Vienna OSJ, traveled to 
the Towson OSJ one or two times per month to conduct the client file reviews. 
 
27. Signator’s policies and procedures required that Mitchell select the files to be 
reviewed and that his selection be “random.”   
 
28. Rather than follow Signator’s policies and procedures for conducting client file 
reviews, Mitchell either allowed representatives to select which files were to be reviewed or 
provided a pre-selected list of names of client files to be reviewed.      
 
29. By allowing financial representatives in the Towson OSJ to select which files were 
to be reviewed or providing representatives with a pre-selected list of which client files he intended 
to review in advance, rather than randomly selecting them on-site, Mitchell provided Glover and 
Williams with the ability to remove all references to Colonial Tidewater prior to his review.  As a 
result of Mitchell’s failure to implement Signator’s policies and procedures regarding client file 
reviews, Glover’s fraudulent scheme and Williams’ involvement in the scheme remained 
undetected. 
 

 
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30. On multiple occasions, Signator’s Supervision Department notified Mitchell that he 
was not conducting client file reviews in accordance with Signator’s policies and procedures.  
Despite Mitchell’s acknowledgement that he was not complying with the firm’s policies and 
procedures, Mitchell continued to allow financial representatives to select their own client files for 
review or provided representatives with a list of names of client files to be reviewed in advance, 
rather than randomly selecting them on-site.   
 
31.  In May 2011, Signator’s then Regional Supervision Consultant told Mitchell that he 
was not conducting client file reviews in accordance with Signator’s procedures and discussed the 
dangers inherent in Mitchell’s practice of giving financial representatives the list of client file 
names in advance.  Despite agreeing to change his practice, Mitchell did not.   
 
32.  Again in November 2011, Signator’s then Regional Supervision Director informed 
Mitchell via email that he was not following Signator’s procedures in conducting client file 
reviews by allowing financial representatives to select their own files to be reviewed.  Even after 
Mitchell learned of Glover’s fraud and Williams’ role in the fraud, he continued to allow financial 
representatives to select their client files for review or provided representatives with a pre-selected 
list of client files that he intended to review.                   
 
33. In addition to allowing Glover and Williams to select their client files to be 
reviewed or providing the names of client files to be reviewed in advance, Mitchell generally 
conducted only one combined client file review for both Glover and Williams, rather than separate 
file reviews for each.  As a result, Mitchell reviewed approximately one-half of the total number of 
client files for Glover and Williams that were required by Signator’s policies and procedures.  In 
light of the significant number of Glover’s and Williams’ customers and clients who were invested 
in Colonial Tidewater, if Mitchell had both randomly selected and selected the correct number of 
client files for review in accordance with firm policies, it is likely that Mitchell would have 
detected red flags that would have led to discovery of the fraud.  
 
34. A variety of documents referencing Colonial Tidewater were found in Glover’s and 
Williams’ Client files in addition to Albridge reports.  These documents included letters, faxes, and 
emails referencing investments in Colonial Tidewater.  In addition, Client files also contained 
Colonial Tidewater transfer documents, which were signed by Clients, authorizing the transfer of 
funds from Signator-approved investments to Colonial Tidewater.  Given the quantity of Colonial 
Tidewater related correspondence, emails, transfer documents, and other documents such as 
Albridge reports found in Glover’s and Williams’ Client files and the fact that a large number of 
their brokerage customers and advisory clients invested in Colonial Tidewater, had Mitchell 
conducted the client file reviews in accordance with Signator’s policies and procedures, it is likely 
that he would have uncovered the violations.   
 
Supervisory Failures and Violations 
 
 35. Section 15(b)(4)(E) of the Exchange Act allows for the imposition of a sanction 
against a broker or dealer who “has failed reasonably to supervise, with a view to preventing 
violations of the securities law, another person who commits such a violation, if such other person 

 
9 
is subject to his supervision.”  The Commission has emphasized that the “responsibility of broker-
dealers to supervise their employees by means of effective, established procedures is a critical 
component in the federal investor protection scheme regulating the securities markets.”  See, e.g., 
La Jolla Capital Corp., Exchange Act Rel. No. 41755, 1999 SEC LEXIS 1642 (Aug. 18, 1999).  
Section 15(b)(6) incorporates by reference Section 15(b)(4)(E) and allows for the imposition of 
sanctions against persons associated with a broker or dealer for failing reasonably to supervise.  
Similarly, Section 203(e)(6) of the Advisers Act authorizes the Commission to impose sanctions 
against an investment adviser if the adviser fails reasonably to supervise, with a view to preventing 
violations of the securities laws, another person who commits such a violation, if that person is 
subject to the adviser’s supervision.  Under Section 203(f) of the Advisers Act, which incorporates 
by reference to Section 203(e)(6), the Commission may also seek sanctions where an associated 
person has failed reasonably to supervise, with a view to preventing violations of the federal 
securities laws and rules thereunder, another person subject to the investment adviser’s or 
associated person’s supervision who commits such violations.  The Commission has repeatedly 
emphasized that the duty to supervise is a critical component of the federal regulatory scheme.  
See, e.g., Thomas C. Palmer and Aeneas Capital Mgmt., L.P., Advisers Act Rel. No. 1693, 2008 
SEC LEXIS 1693 (July 23, 2008).       
 
 36. As a result of the conduct described above, Signator and Mitchell failed reasonably 
to supervise Glover and Williams with a view to preventing and detecting Glover’s willful 
violations of Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act and Rule 10b-
5 thereunder, and Sections 206(1) and 206(2) of the Advisers Act, and Williams’ willful violations 
of Sections 206(1) and 206(2) of the Advisers Act.   
 
 37. As a result of the conduct described above, Signator willfully violated Section 
206(4) of the Advisers Act and Rule 206(4)-7 thereunder, which requires, among other things, that 
registered investment advisers adopt and implement written policies and procedures reasonably 
designed to prevent violations by the investment adviser and its supervised persons of the Advisers 
Act and rules.  Signator failed to adopt and implement policies and procedures for the creation, 
use, and review of Albridge reports, and, as a consequence, Glover’s and Williams’ fraud remained 
undetected.    
 
Remedial Efforts 
 
 38. In determining to accept Signator’s Offer, the Commission considered the remedial 
acts taken by Signator, referenced in paragraph 24. 
 
Fair Fund 
 
 39. Respondent Signator has agreed that neither it nor its officers, agents, servants, 
employees, parents, affiliates, assigns and those acting on its behalf will seek or accept any 
payments or any other recovery from the Fair Fund created pursuant to Section 308(a) of the 
Sarbanes-Oxley Act of 2002, as amended.  In determining whether to accept the Offer, the 
Commission has considered this agreement. 
 

 
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Undertaking 
 
 40. Respondent Mitchell shall provide to the Commission, within 10 days after the end 
of the twelve (12) month suspension period described above, an affidavit that he has complied fully 
with the sanctions described in Section IV below. 
 
IV. 
 
 In view of the foregoing, the Commission deems it appropriate, and in the public interest, 
to impose the sanctions agreed to in Respondents’ Offers. 
 
 Accordingly, pursuant to Section 15(b) of the Exchange Act and Sections 203(e) and 203(f) 
of the Advisers Act, it is hereby ORDERED that: 
 
 A. Respondent Signator is censured. 
 
B. Respondent Signator shall, within 10 days of the entry of this Order, pay a civil 
money penalty in the amount of $450,000 to the Securities and Exchange Commission.  If timely 
payment is not made, additional interest shall accrue pursuant to 31 U.S.C. § 3717.  Payment must 
be made in one of the following ways:   
 
(1) Respondent may transmit payment electronically to the Commission, which 
will provide detailed ACH transfer/Fedwire instructions upon request;  
 
(2) Respondent may make direct payment from a bank account via Pay.gov 
through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or  
 
(3) Respondent may pay by certified check, bank cashier’s check, or United 
States postal money order, made payable to the Securities and Exchange 
Commission and hand-delivered or mailed to:  
 
Enterprise Services Center 
Accounts Receivable Branch 
HQ Bldg., Room 181, AMZ-341 
6500 South MacArthur Boulevard 
Oklahoma City, OK 73169 
 
Payments by check or money order must be accompanied by a cover letter identifying 
Signator as a Respondent in these proceedings, and the file number of these proceedings; a copy of 
the cover letter and check or money order must be sent to G. Jeffrey Boujoukos, Associate 
Regional Director, Philadelphia Regional Office, Securities and Exchange Commission, 1617 JFK 
Boulevard, Suite 520, Philadelphia, PA 19103.   
 
C. Respondent Mitchell be, and hereby is, suspended from associating in a supervisory 
capacity with any broker, dealer, investment adviser, municipal securities dealer, municipal advisor, 

 
11 
transfer agent, or nationally recognized statistical rating organization for a period of twelve (12) 
months, effective on the second Monday following the entry of this Order. 
  
D. Respondent Mitchell shall, within 10 days of the entry of this Order, pay a civil 
money penalty in the amount of $15,000 to the Securities and Exchange Commission.  If timely 
payment is not made, additional interest shall accrue pursuant to 31 U.S.C. § 3717.  Payment must 
be made in one of the following ways:   
 
(1) Respondent may transmit payment electronically to the Commission, which 
will provide detailed ACH transfer/Fedwire instructions upon request;  
 
(2) Respondent may make direct payment from a bank account via Pay.gov 
through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or  
 
(3) Respondent may pay by certified check, bank cashier’s check, or United 
States postal money order, made payable to the Securities and Exchange 
Commission and hand-delivered or mailed to:  
 
Enterprise Services Center 
Accounts Receivable Branch 
HQ Bldg., Room 181, AMZ-341 
6500 South MacArthur Boulevard 
Oklahoma City, OK 73169  
 
Payments by check or money order must be accompanied by a cover letter identifying 
Mitchell as a Respondent in these proceedings, and the file number of these proceedings; a copy of 
the cover letter and check or money order must be sent to G. Jeffrey Boujoukos, Associate 
Regional Director, Philadelphia Regional Office, Securities and Exchange Commission, 1617 JFK 
Boulevard, Suite 520, Philadelphia, PA 19103.   
 
 E.  Pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002, as amended, a Fair 
Fund is created for the civil money penalties referenced in paragraphs B and D above for 
distribution to affected investors.  The Fair Fund may accept funds, such as civil money penalties, 
disgorgement, and prejudgment interest, paid in a related federal court action or administrative 
proceeding arising out of the same underlying facts.  Amounts ordered to be paid as civil money 
penalties pursuant to this Order shall be treated as penalties paid to the government for all 
purposes, including all tax purposes.  To preserve the deterrent effect of the civil penalty, 
Respondents agree that in any Related Investor Action, they shall not argue that they are entitled 
to, nor shall they benefit by, offset or reduction of any award of compensatory damages by the 
amount of any part of Respondents’ payment of civil penalties in this action (“Penalty Offset”).  If 
the court in any Related Investor Action grants such a Penalty Offset, Respondents agree that they 
shall, within 30 days after entry of a final order granting the Penalty Offset, notify the 
Commission’s counsel in this action and pay the amount of the Penalty Offset to the Securities and 
Exchange Commission.  Such a payment shall not be deemed an additional civil penalty and shall 
not be deemed to change the amount of the civil penalty imposed in this proceeding.  For purposes 

 
12 
of this paragraph, a “Related Investor Action” means a private damages action brought against 
Respondents by or on behalf of one or more investors based on substantially the same facts as 
alleged in the Order instituted by the Commission in this proceeding. 
  
V. 
It is further Ordered that, solely for purposes of exceptions to discharge set forth in Section 
523 of the Bankruptcy Code, 11 U.S.C. § 523, the findings in this Order are true and admitted by 
Respondent Mitchell, and further, any debt for disgorgement, prejudgment interest, civil penalty or 
other amounts due by Respondent Mitchell under this Order or any other judgment, order, consent 
order, decree or settlement agreement entered in connection with this proceeding, is a debt for the 
violation by Respondent Mitchell of the federal securities laws or any regulation or order issued 
under such laws, as set forth in Section 523(a)(19) of the Bankruptcy Code, 11 U.S.C. § 
523(a)(19). 
 
 
 By the Commission. 
 
 
 
       Brent J. Fields 
       Secretary 

UNITED STATES OF AMERICA 

 Before the 

 SECURITIES AND EXCHANGE COMMISSION 

 

 

SECURITIES EXCHANGE ACT OF 1934 

Release No. 75690 / August 13, 2015 

 

INVESTMENT ADVISERS ACT OF 1940 

Release No. 4170 / August 13, 2015 

 

ADMINISTRATIVE PROCEEDING 

File No. 3-16753 

 

In the Matter of 

 

SIGNATOR INVESTORS, 

INC. and GREGORY J. 

MITCHELL,  

 

Respondents. 

 

 

 

 

ORDER INSTITUTING ADMINISTRATIVE 

PROCEEDINGS PURSUANT TO SECTION 

15(b) OF THE SECURITIES EXCHANGE 

ACT OF 1934 AND SECTIONS 203(e) AND 

203(f) OF THE INVESTMENT ADVISERS 

ACT OF 1940, MAKING FINDINGS, AND 

IMPOSING REMEDIAL SANCTIONS  

   

 

I. 

 

 The Securities and Exchange Commission (“Commission”) deems it appropriate and in the 

public interest that public administrative proceedings be, and hereby are, instituted pursuant to 

Section 15(b) of the Securities Exchange Act of 1934 (“Exchange Act”), and Sections 203(e) and 

203(f) of the Investment Advisers Act of 1940 (“Advisers Act”) against Signator Investors, Inc. 

(“Signator”) and  Gregory J. Mitchell (“Mitchell”), (collectively, “Respondents”).    

 

II. 

 

 In anticipation of the institution of these proceedings, Respondents have each submitted 

Offers of Settlement (the “Offers”) which the Commission has determined to accept.  Solely for 

the purpose of these proceedings and any other proceedings brought by or on behalf of the 

Commission, or to which the Commission is a party, and without admitting or denying the findings  

herein, except as to the Commission’s jurisdiction over them and the subject matter of these 

proceedings, which are admitted, and except as provided herein in Section V, Respondents consent 



 2 

to the entry of this Order Instituting Administrative Proceedings, Pursuant to Section 15(b) of the 

Securities Exchange Act of 1934 and Sections 203(e) and 203(f) of the Investment Advisers Act of 

1940, Making Findings, and Imposing Remedial Sanctions (“Order”), as set forth below.   

 

III. 

 

 On the basis of this Order and Respondents’ Offer, the Commission finds1 that:  

 

Summary 

 

 These proceedings arise out of Respondents’ failure reasonably to supervise James R. 

Glover (“Glover”) and Cory D. Williams (“Williams”), former registered representatives and 

investment adviser representatives (collectively referred to as “financial representatives”) at 

Signator, with a view to preventing and detecting Glover’s and Williams’ violations of the federal 

securities laws.  While associated with Signator, from approximately May 1998 through May 2012, 

Glover conducted an offering fraud that defrauded at least 125 Signator advisory clients and 

brokerage customers (collectively, “Clients”) of approximately $13.5 million by soliciting them to 

invest in Colonial Tidewater Realty Income Partners, LLC (“Colonial Tidewater”), a security not 

approved for sale by Signator representatives.  Glover made materially false and misleading 

statements regarding the financial health of Colonial Tidewater, the expected returns and risk of 

investing, and deceived investors by, among other things, creating the false impression that Colonial 

Tidewater was a Signator-approved investment.  Glover and Williams met with investors to discuss 

investment in Colonial Tidewater in Signator’s offices, maintained files reflecting Clients’ 

investments in Colonial Tidewater within the Signator offices, and provided many Clients with 

consolidated reports generated from Signator computer systems that included or attached false 

valuations of their Colonial Tidewater investments.   

 

 During the pendency of their fraud, Glover and Williams received undisclosed commissions 

from Colonial Tidewater totaling approximately $188,382.  Glover’s receipt of commissions from 

Colonial Tidewater represented a conflict of interest that he failed to disclose to his brokerage 

customers in connection with recommendations that they invest in Colonial Tidewater and to his 

advisory clients in connection with advisory relationships.  Williams similarly failed to disclose this 

conflict of interest to his advisory clients.   

 

 By engaging in the misconduct described above, Glover violated Section 17(a) of the 

Securities Act of 1933, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and Sections 

206(1) and 206(2) of the Advisers Act.  Williams violated Sections 206(1) and 206(2) of the 

Advisers Act.   

  

 Signator did not have policies and procedures reasonably designed to prevent and detect 

Glover’s and Williams’ misuse of Signator’s consolidated reports, known as Albridge reports, to 

                                                 
1
  The findings herein are made pursuant to Respondents’ Offers of Settlement and are not 

binding on any other person or entity in this or any other proceeding. 

 



 3 

perpetrate a securities fraud upon their Clients.  Specifically, Signator had no policies explicitly 

governing the creation, use, and review of Albridge reports.  These consolidated reports showed that 

a substantial number of Signator’s Clients serviced by Glover and Williams were invested in 

Colonial Tidewater, a security not offered or approved by Signator.  Had Signator had reasonable 

policies and procedures governing Albridge reports, it would have likely uncovered Glover’s and 

Williams’ fraud.   

    

 Beginning in January 2009, Gregory Mitchell was responsible for supervising Glover and 

Williams.  Mitchell failed reasonably to implement Signator’s policies and procedures for 

conducting reviews of files of brokerage customers and advisory clients (“client file reviews”).  

Glover and Williams’ Client files contained correspondence, emails, and documents authorizing the 

transfer of funds from Signator-approved investments to Colonial Tidewater as well as Albridge 

reports.  But Mitchell ignored key components of Signator’s file review policies.  Had Mitchell 

reasonably implemented Signator’s policies and procedures regarding client file reviews, the fraud 

likely would have been detected.  As a result of Mitchell’s failure to implement Signator’s policies 

and procedures for properly conducting client file reviews, Mitchell failed reasonably to supervise 

Glover and Williams with a view to preventing and detecting their violations of the federal 

securities laws.   

 

Respondents 

 

 1. Signator Investors, Inc., headquartered in Boston, Massachusetts, is a registered 

broker-dealer and investment adviser.   

 

 2. Gregory J. Mitchell, age 65, resides in Leesburg, Virginia.  Beginning in 

approximately January 2004, he was the Director of Compliance for Signator’s Vienna, Virginia 

Office of Supervisory Jurisdiction (“Vienna OSJ”).  In January 2009, Mitchell also became 

Director of Compliance for Signator’s Towson, Maryland Office of Supervisory Jurisdiction 

(“Towson OSJ”).  During the relevant time period, Mitchell was responsible for several 

supervisory functions, including client file reviews, and beginning in January 2009, was a 

designated supervisor for Glover and Williams with respect to their brokerage and advisory 

business.  In December 2014, Mitchell relinquished his supervisory responsibilities and was a 

registered representative and investment adviser representative in the Vienna OSJ until June 2015.  

He holds series 1, 7, 24, 51, 63, and 65.     

 

Other Relevant Persons and Entities 

 

 3. James R. Glover, age 73, is a resident of White Hall, Maryland.  He was a registered 

representative and investment adviser representative in Signator’s Towson OSJ from May 1, 1998 

through May 11, 2012, when he was permitted to resign.  He held series 6, 22, 63, and 65.   

 

4. Cory D. Williams, age 43, is a resident of Monkton, Maryland.  He was a registered 

representative and investment adviser representative in Signator’s Towson OSJ from April 30, 

1998 through March 7, 2013, when his association with Signator was terminated.  From April 2013 

through September 2013, Williams was a registered representative and investment adviser 



 4 

representative associated with a broker-dealer and investment adviser registered with the 

Commission.  He holds series 6, 7, 63, and 65. 

 

5. Colonial Tidewater Realty Income Partners, LLC is a Maryland limited liability 

company that was formed on January 26, 1999.  Colonial Tidewater is not registered with the 

Commission.  Glover has been a managing member since April 1, 2004.  The company’s principal 

office is located in Conowingo, Maryland.  Colonial Tidewater owns and operates residential and 

commercial properties through its subsidiaries in Maryland, Pennsylvania, and New York.   

 

Background 

 

6. In May 1998, Glover and Williams joined Signator’s Towson OSJ.  The two had 

previously worked together at another broker-dealer located in Towson, where Williams had begun 

his career under Glover’s tutelage.  Glover and Williams provided various services to their shared 

group of Clients.  Some of these Clients were brokerage customers, some were advisory clients, 

and many had both brokerage and advisory relationships with Glover and Williams.  Together, 

Glover and Williams provided their Clients with a broad array of financial products in addition to 

brokerage and investment advisory services, including annuities, and long term care and life 

insurance.     

 

7. Glover is a co-managing member of Colonial Tidewater and was responsible for 

handling all investor relationships and solicitations.  From approximately January 1999 through 

May 2012, Glover solicited his Signator brokerage customers and advisory clients asking that they 

invest in partnership units issued by Colonial Tidewater, which was not a Signator-approved 

investment.  Ultimately, at least 125 of his Clients agreed to invest a total of approximately $13.5 

million.  Glover solicited these investments through myriad misrepresentations.  

 

8.   Glover offered units in Colonial Tidewater through a series of private placement 

memoranda (“PPM”).  According to the PPMs, the offering proceeds were to be used to invest, 

through Colonial Tidewater’s subsidiaries, in various forms of residential and commercial real 

estate.  Although at least some of the money raised from investors was used to invest in this 

manner, through the PPMs and written property reports provided to certain prospective investors, 

Glover misled investors about, among other things, the financial condition of Colonial Tidewater 

and its real estate holdings.  These documents provided grossly overstated property values, and 

even failed to disclose that certain properties had been lost to foreclosure or were facing 

foreclosure.   

 

9.   In addition, Glover made oral misrepresentations in order to entice Clients to invest.  

Glover represented to investors that Colonial Tidewater was a low risk investment that was suitable 

for all Clients, regardless of income or financial status.  He also falsely promised certain investors 

guaranteed rates of return, safety of principal, and liquidity.  Glover failed to disclose that it was 

unlikely that investors would be able to redeem their investment in light of the fact that many of 

Colonial Tidewater’s properties were highly mortgaged and were not income generating. 

 



 5 

10. While the PPMs permitted Glover to receive fees as a managing member of 

Colonial Tidewater, Glover orally represented to many Clients that he was not receiving 

compensation for his work relating to Colonial Tidewater.  To the contrary, Glover and Williams 

were receiving commissions from Colonial Tidewater on a quarterly basis of approximately three 

percent of investment monies Glover solicited.  Glover and Williams split these commissions 

equally.  From 2005 through 2011, Glover and Williams received commissions totaling 

approximately $188,382.      

 

11. While Glover solicited Signator Clients to invest in Colonial Tidewater, Williams 

was aware of Glover’s solicitations and that Colonial Tidewater was not an authorized or approved 

Signator investment.  Following the Clients’ investments in Colonial Tidewater, Glover and 

Williams actively serviced Clients with respect to their investments in Colonial Tidewater.   They 

met with investors in the Towson OSJ, maintained Client files in the office relating to Colonial 

Tidewater, and most importantly, provided Clients with Albridge reports that reflected their 

Clients’ investments in Colonial Tidewater.  Williams failed to disclose to his advisory Clients his 

receipt of commissions associated with the Clients’ purchases of the partnership units issued by 

Colonial Tidewater.   

 

12. Glover, in conjunction with Williams, was able to conduct his fraud over a period 

of years by giving Clients the false impression that Colonial Tidewater was a Signator-approved 

investment, subject to all of the same requirements and oversight as its other financial products. 

 

13. Based on the conduct described above, Glover violated Section 17(a) of the 

Securities Act, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and Sections 206(1) 

and 206(2) of the Advisers Act, and Williams violated Sections 206(1) and 206(2) of the Advisers 

Act. 

 

Signator’s Failure to Have Reasonable Policies 

and Procedures Regarding Consolidated Reports 

 

14. During the relevant time period, Signator failed to have reasonable policies and 

procedures for the creation, use, and review of consolidated reports.  A “consolidated report” is a 

single document that combines information regarding most or all of a customer’s or client’s 

financial holdings, regardless of where those assets are held.  Beginning in 2004, Signator 

enabled its financial representatives to create consolidated reports, known as Albridge reports, 

using software licensed from Albridge Solutions, Inc.  Signator charged financial representatives 

a monthly fee to use the Albridge system.  Glover and Williams began using the Albridge system 

in approximately 2005.   

 

 15. The Albridge system enabled financial representatives to access electronic data to 

create, for distribution to customers and clients, a consolidated report showing a customer’s or 

client’s total holdings, including those within Signator brokerage accounts, Signator advised 

accounts, as well as certain third-party advised accounts, variable annuities, and insurance 

products.  The top of each page of an Albridge report listed the financial representative’s name, 

title, “Signator Investors, Inc.,” and the financial representative’s address and telephone number. 



 6 

 

 16.  The Albridge system also had a manual entry function that permitted a financial 

representative to add information manually into the report.  For example, representatives could 

manually add investments and the purported value of such investments into a customer’s or client’s 

report.  The manual entry function was intended to allow the financial representative to include in 

the report other investments to provide the customer or client with a comprehensive view of his or 

her financial condition by including all holdings, whether or not they were held through Signator.   

 

 17. The Albridge system maintained by Signator allowed for the overwriting of old 

electronic reports and the periodic purging of such files.  Financial representatives largely treated 

Albridge reports like other documents shown to customers and clients, and put copies of the reports 

in client files.   

 

 18.   Signator understood the Albridge reports were being provided to customers and 

clients and was aware of the manual entry function and its use by financial representatives.   

    

 19. Notwithstanding its knowledge of the existence of the manual entry function in 

Albridge reports and that financial representatives used the function, Signator had no policies 

and procedures governing financial representatives’ creation, use, or dissemination of the reports.  

For example, Signator had no policies and procedures instructing financial representatives as to 

the content of Albridge reports, including what information could or could not be included. 

 

 20. Finally, Signator had no policy or procedure governing how the representative-

created Abridge reports were to be reviewed.  No one at Signator had responsibility for 

overseeing the content of Albridge reports or for reviewing the reports before Glover and 

Williams sent them to the Clients.  There was no review of manually entered data that was 

included in the reports.    

   

Signator’s Lack of Reasonable Policies 

and Procedures Led to Failure to Prevent or Detect the Fraud 

 

21. Glover and Williams frequently provided Signator Clients with Albridge reports 

reflecting investments purchased through Signator as well as their outside holdings in Colonial 

Tidewater.  The Colonial Tidewater investment was either included within a section of the report 

titled “Manual Accounts” or on a page attached to the back of the report, setting forth the purported 

amount of the investment.  

 

22. When Glover and Williams’ conduct came to light, the client files for Signator 

Clients they serviced contained at least 300 Albridge reports reflecting investments in Colonial 

Tidewater totaling millions of dollars.    

 

23.  The lack of reasonable policies and procedures governing the creation, use, and 

review of Albridge reports resulted in Signator’s failure to identify and prevent the fraud that was 

being committed by Glover and Williams.  If Signator had reasonable policies and procedures 

governing Albridge reports, Glover and Williams’ fraud likely would have been uncovered due to 



 7 

the substantial number of their Clients investing in Colonial Tidewater and the sheer number of 

Albridge reports containing references to Colonial Tidewater.  Supervisory review of the reports 

would have highlighted a number of red flags that should have prompted follow-up with Glover 

and Williams regarding Colonial Tidewater, how they were marketing Colonial Tidewater to 

brokerage customers and advisory clients, and whether Glover and Williams had and disclosed any 

conflicts of interest, such as receipt of commissions.  

  

Signator Enhances Oversight of Consolidated Reports 

 

24. In March 2013, Signator hired a consultant to undertake a comprehensive review of 

its supervisory systems.  With the assistance of the consultant, Signator has reviewed, evaluated, 

and enhanced its supervisory and compliance systems, including by instituting formal training and 

written policies and procedures concerning the creation, use, and review of Albridge reports.  

Significant to the improvement of its systems, Signator also eliminated the manual entry function 

from the Albridge reports in 2014.   

 

Mitchell’s Failure to Reasonably Implement Signator’s Policies 

and Procedures Regarding Client File Reviews 

 

25. In relevant part, Signator’s policies and procedures required a supervisor to conduct 

two client file reviews each calendar year of each financial representative.  During the client file 

review, the supervisor selected a sampling of a financial representative’s files for review to ensure 

that the file was properly maintained and contained all required documentation. 

 

26. Beginning in 2009, Mitchell was responsible for conducting client file reviews for 

each financial representative in the Towson OSJ, including the files maintained for Signator 

Clients serviced by Glover and Williams.  Mitchell, who worked out of the Vienna OSJ, traveled to 

the Towson OSJ one or two times per month to conduct the client file reviews. 

 

27. Signator’s policies and procedures required that Mitchell select the files to be 

reviewed and that his selection be “random.”   

 

28. Rather than follow Signator’s policies and procedures for conducting client file 

reviews, Mitchell either allowed representatives to select which files were to be reviewed or 

provided a pre-selected list of names of client files to be reviewed.      

 

29. By allowing financial representatives in the Towson OSJ to select which files were 

to be reviewed or providing representatives with a pre-selected list of which client files he intended 

to review in advance, rather than randomly selecting them on-site, Mitchell provided Glover and 

Williams with the ability to remove all references to Colonial Tidewater prior to his review.  As a 

result of Mitchell’s failure to implement Signator’s policies and procedures regarding client file 

reviews, Glover’s fraudulent scheme and Williams’ involvement in the scheme remained 

undetected. 

 



 8 

30. On multiple occasions, Signator’s Supervision Department notified Mitchell that he 

was not conducting client file reviews in accordance with Signator’s policies and procedures.  

Despite Mitchell’s acknowledgement that he was not complying with the firm’s policies and 

procedures, Mitchell continued to allow financial representatives to select their own client files for 

review or provided representatives with a list of names of client files to be reviewed in advance, 

rather than randomly selecting them on-site.   

 

31.  In May 2011, Signator’s then Regional Supervision Consultant told Mitchell that he 

was not conducting client file reviews in accordance with Signator’s procedures and discussed the 

dangers inherent in Mitchell’s practice of giving financial representatives the list of client file 

names in advance.  Despite agreeing to change his practice, Mitchell did not.   

 

32.  Again in November 2011, Signator’s then Regional Supervision Director informed 

Mitchell via email that he was not following Signator’s procedures in conducting client file 

reviews by allowing financial representatives to select their own files to be reviewed.  Even after 

Mitchell learned of Glover’s fraud and Williams’ role in the fraud, he continued to allow financial 

representatives to select their client files for review or provided representatives with a pre-selected 

list of client files that he intended to review.                   

 

33. In addition to allowing Glover and Williams to select their client files to be 

reviewed or providing the names of client files to be reviewed in advance, Mitchell generally 

conducted only one combined client file review for both Glover and Williams, rather than separate 

file reviews for each.  As a result, Mitchell reviewed approximately one-half of the total number of 

client files for Glover and Williams that were required by Signator’s policies and procedures.  In 

light of the significant number of Glover’s and Williams’ customers and clients who were invested 

in Colonial Tidewater, if Mitchell had both randomly selected and selected the correct number of 

client files for review in accordance with firm policies, it is likely that Mitchell would have 

detected red flags that would have led to discovery of the fraud.  

 

34. A variety of documents referencing Colonial Tidewater were found in Glover’s and 

Williams’ Client files in addition to Albridge reports.  These documents included letters, faxes, and 

emails referencing investments in Colonial Tidewater.  In addition, Client files also contained 

Colonial Tidewater transfer documents, which were signed by Clients, authorizing the transfer of 

funds from Signator-approved investments to Colonial Tidewater.  Given the quantity of Colonial 

Tidewater related correspondence, emails, transfer documents, and other documents such as 

Albridge reports found in Glover’s and Williams’ Client files and the fact that a large number of 

their brokerage customers and advisory clients invested in Colonial Tidewater, had Mitchell 

conducted the client file reviews in accordance with Signator’s policies and procedures, it is likely 

that he would have uncovered the violations.   

 

Supervisory Failures and Violations 

 

 35. Section 15(b)(4)(E) of the Exchange Act allows for the imposition of a sanction 

against a broker or dealer who “has failed reasonably to supervise, with a view to preventing 

violations of the securities law, another person who commits such a violation, if such other person 



 9 

is subject to his supervision.”  The Commission has emphasized that the “responsibility of broker-

dealers to supervise their employees by means of effective, established procedures is a critical 

component in the federal investor protection scheme regulating the securities markets.”  See, e.g., 

La Jolla Capital Corp., Exchange Act Rel. No. 41755, 1999 SEC LEXIS 1642 (Aug. 18, 1999).  

Section 15(b)(6) incorporates by reference Section 15(b)(4)(E) and allows for the imposition of 

sanctions against persons associated with a broker or dealer for failing reasonably to supervise.  

Similarly, Section 203(e)(6) of the Advisers Act authorizes the Commission to impose sanctions 

against an investment adviser if the adviser fails reasonably to supervise, with a view to preventing 

violations of the securities laws, another person who commits such a violation, if that person is 

subject to the adviser’s supervision.  Under Section 203(f) of the Advisers Act, which incorporates 

by reference to Section 203(e)(6), the Commission may also seek sanctions where an associated 

person has failed reasonably to supervise, with a view to preventing violations of the federal 

securities laws and rules thereunder, another person subject to the investment adviser’s or 

associated person’s supervision who commits such violations.  The Commission has repeatedly 

emphasized that the duty to supervise is a critical component of the federal regulatory scheme.  

See, e.g., Thomas C. Palmer and Aeneas Capital Mgmt., L.P., Advisers Act Rel. No. 1693, 2008 

SEC LEXIS 1693 (July 23, 2008).       

 

 36. As a result of the conduct described above, Signator and Mitchell failed reasonably 

to supervise Glover and Williams with a view to preventing and detecting Glover’s willful 

violations of Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act and Rule 10b-

5 thereunder, and Sections 206(1) and 206(2) of the Advisers Act, and Williams’ willful violations 

of Sections 206(1) and 206(2) of the Advisers Act.   

 

 37. As a result of the conduct described above, Signator willfully violated Section 

206(4) of the Advisers Act and Rule 206(4)-7 thereunder, which requires, among other things, that 

registered investment advisers adopt and implement written policies and procedures reasonably 

designed to prevent violations by the investment adviser and its supervised persons of the Advisers 

Act and rules.  Signator failed to adopt and implement policies and procedures for the creation, 

use, and review of Albridge reports, and, as a consequence, Glover’s and Williams’ fraud remained 

undetected.    

 

Remedial Efforts 

 

 38. In determining to accept Signator’s Offer, the Commission considered the remedial 

acts taken by Signator, referenced in paragraph 24. 

 

Fair Fund 

 

 39. Respondent Signator has agreed that neither it nor its officers, agents, servants, 

employees, parents, affiliates, assigns and those acting on its behalf will seek or accept any 

payments or any other recovery from the Fair Fund created pursuant to Section 308(a) of the 

Sarbanes-Oxley Act of 2002, as amended.  In determining whether to accept the Offer, the 

Commission has considered this agreement. 

 



 10 

Undertaking 

 

 40. Respondent Mitchell shall provide to the Commission, within 10 days after the end 

of the twelve (12) month suspension period described above, an affidavit that he has complied fully 

with the sanctions described in Section IV below. 

 

IV. 

 

 In view of the foregoing, the Commission deems it appropriate, and in the public interest, 

to impose the sanctions agreed to in Respondents’ Offers. 

 

 Accordingly, pursuant to Section 15(b) of the Exchange Act and Sections 203(e) and 203(f) 

of the Advisers Act, it is hereby ORDERED that: 

 

 A. Respondent Signator is censured. 

 

B. Respondent Signator shall, within 10 days of the entry of this Order, pay a civil 

money penalty in the amount of $450,000 to the Securities and Exchange Commission.  If timely 

payment is not made, additional interest shall accrue pursuant to 31 U.S.C. § 3717.  Payment must 

be made in one of the following ways:   

 

(1) Respondent may transmit payment electronically to the Commission, which 

will provide detailed ACH transfer/Fedwire instructions upon request;  

 

(2) Respondent may make direct payment from a bank account via Pay.gov 

through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or  

 

(3) Respondent may pay by certified check, bank cashier’s check, or United 

States postal money order, made payable to the Securities and Exchange 

Commission and hand-delivered or mailed to:  

 

Enterprise Services Center 

Accounts Receivable Branch 

HQ Bldg., Room 181, AMZ-341 

6500 South MacArthur Boulevard 

Oklahoma City, OK 73169 

 

Payments by check or money order must be accompanied by a cover letter identifying 

Signator as a Respondent in these proceedings, and the file number of these proceedings; a copy of 

the cover letter and check or money order must be sent to G. Jeffrey Boujoukos, Associate 

Regional Director, Philadelphia Regional Office, Securities and Exchange Commission, 1617 JFK 

Boulevard, Suite 520, Philadelphia, PA 19103.   

 

C. Respondent Mitchell be, and hereby is, suspended from associating in a supervisory 

capacity with any broker, dealer, investment adviser, municipal securities dealer, municipal advisor, 



 11 

transfer agent, or nationally recognized statistical rating organization for a period of twelve (12) 

months, effective on the second Monday following the entry of this Order. 

  

D. Respondent Mitchell shall, within 10 days of the entry of this Order, pay a civil 

money penalty in the amount of $15,000 to the Securities and Exchange Commission.  If timely 

payment is not made, additional interest shall accrue pursuant to 31 U.S.C. § 3717.  Payment must 

be made in one of the following ways:   

 

(1) Respondent may transmit payment electronically to the Commission, which 

will provide detailed ACH transfer/Fedwire instructions upon request;  

 

(2) Respondent may make direct payment from a bank account via Pay.gov 

through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or  

 

(3) Respondent may pay by certified check, bank cashier’s check, or United 

States postal money order, made payable to the Securities and Exchange 

Commission and hand-delivered or mailed to:  

 

Enterprise Services Center 

Accounts Receivable Branch 

HQ Bldg., Room 181, AMZ-341 

6500 South MacArthur Boulevard 

Oklahoma City, OK 73169  

 

Payments by check or money order must be accompanied by a cover letter identifying 

Mitchell as a Respondent in these proceedings, and the file number of these proceedings; a copy of 

the cover letter and check or money order must be sent to G. Jeffrey Boujoukos, Associate 

Regional Director, Philadelphia Regional Office, Securities and Exchange Commission, 1617 JFK 

Boulevard, Suite 520, Philadelphia, PA 19103.   

 

 E.  Pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002, as amended, a Fair 

Fund is created for the civil money penalties referenced in paragraphs B and D above for 

distribution to affected investors.  The Fair Fund may accept funds, such as civil money penalties, 

disgorgement, and prejudgment interest, paid in a related federal court action or administrative 

proceeding arising out of the same underlying facts.  Amounts ordered to be paid as civil money 

penalties pursuant to this Order shall be treated as penalties paid to the government for all 

purposes, including all tax purposes.  To preserve the deterrent effect of the civil penalty, 

Respondents agree that in any Related Investor Action, they shall not argue that they are entitled 

to, nor shall they benefit by, offset or reduction of any award of compensatory damages by the 

amount of any part of Respondents’ payment of civil penalties in this action (“Penalty Offset”).  If 

the court in any Related Investor Action grants such a Penalty Offset, Respondents agree that they 

shall, within 30 days after entry of a final order granting the Penalty Offset, notify the 

Commission’s counsel in this action and pay the amount of the Penalty Offset to the Securities and 

Exchange Commission.  Such a payment shall not be deemed an additional civil penalty and shall 

not be deemed to change the amount of the civil penalty imposed in this proceeding.  For purposes 



 12 

of this paragraph, a “Related Investor Action” means a private damages action brought against 

Respondents by or on behalf of one or more investors based on substantially the same facts as 

alleged in the Order instituted by the Commission in this proceeding. 

  

V. 

It is further Ordered that, solely for purposes of exceptions to discharge set forth in Section 

523 of the Bankruptcy Code, 11 U.S.C. § 523, the findings in this Order are true and admitted by 

Respondent Mitchell, and further, any debt for disgorgement, prejudgment interest, civil penalty or 

other amounts due by Respondent Mitchell under this Order or any other judgment, order, consent 

order, decree or settlement agreement entered in connection with this proceeding, is a debt for the 

violation by Respondent Mitchell of the federal securities laws or any regulation or order issued 

under such laws, as set forth in Section 523(a)(19) of the Bankruptcy Code, 11 U.S.C. § 

523(a)(19). 

 

 

 By the Commission. 

 

 

 

       Brent J. Fields 

       Secretary