2015-04-14 SEC Press complaint 1013 KB 23,127 chars

SEC v. Leroy Brown, Jr.; and LB Stocks and Trades Advice LLC, No. 6:15-cv-00119, Western District of Texas (Apr. 14, 2015) — Complaint

raw: Complaint against Defendants Leroy Brown, Jr. and LB Stocks and Trades Advice LLC

Complaint against Defendants Leroy Brown, Jr. and LB Stocks and Trades Advice LLC, No. 6:15-cv-00119 (Apr. 14, 2015)

Caption: SEC v. Leroy Brown, Jr, et al.

Exhibit of SEC Halts Investment Scheme Targeting Military Personnel

summary

Leroy Brown, Jr. and his company LB Stocks and Trades Advice LLC defrauded U.S. military personnel and other investors by falsely claiming SEC/FINRA registration, guaranteeing 100-200% returns on $1,000 membership certificates for non-existent real estate and stock investments, leading the SEC to file a complaint seeking injunctions, disgorgement, and penalties.

paragraph

Leroy Brown, Jr. and LB Stocks and Trades Advice LLC were charged by the SEC with violating Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 and Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934. Brown, who held no securities licenses and had no financial industry experience, deceived investors—primarily military personnel—by fabricating affiliations with Apple, Walmart, and other major corporations, falsely claiming SEC/FINRA registration, and promising guaranteed returns of double or triple their $1,000 investment in non-existent real estate and securities. The SEC filed the complaint on April 13, 2015, in the Western District of Texas, seeking permanent injunctions, disgorgement of ill-gotten gains with prejudgment interest, and civil monetary penalties.

narrative

Leroy Brown, Jr., a former U.S. Army member from Killeen, Texas, and his company LB Stocks and Trades Advice LLC were accused by the SEC of operating a fraudulent investment scheme since at least January 2014, primarily targeting current and former military personnel. Brown falsely claimed that LB Stocks was registered with the SEC and FINRA, employed licensed stockbrokers, maintained offices in New York and San Francisco, and had corporate partnerships with major firms like Apple, Walmart, Microsoft, and McAfee—all of which were entirely fabricated. He solicited investors to purchase $1,000 membership certificates, promising guaranteed returns of 100% to 200% within 120 days by investing in undeveloped real estate and trading stocks, ETFs, and currencies, none of which actually occurred. Brown had no securities licenses or prior experience in financial services, and investor funds were funneled into his personal accounts rather than any legitimate investment vehicle. The SEC’s complaint, filed on April 13, 2015, in the U.S. District Court for the Western District of Texas (Case No. 6:15-cv-00119), alleged that the membership certificates constituted unregistered securities under federal law. The Commission sought emergency and permanent injunctive relief, disgorgement of all ill-gotten gains with prejudgment interest, and civil monetary penalties to prevent further harm. Brown and LB Stocks had never been registered with any federal or state securities regulator, and their promotional materials allegedly copied content from legitimate financial websites like E*TRADE to lend false credibility to their scheme.

Enriched metadata

Scheme: affinity-fraud (95%)
Court: Western District of Texas
Case No.: 6:15-cv-00119
Victims: 65,000

Classified affinity-fraud(confidence 95%). EDGAR detection: forms Form D· recall 58% / precision 2%. detection rule →

Extracted insights

Dollar amounts 2

$1K $1,000 <$10K
$1K $1,000 <$10K

Entities 3

company lb stocks and trades advice llc
agency Securities and Exchange Commission
agency securities licenses and registrations with sec and finra

Triples 10

Leroy Brown, Jr. engaged in fraudulent conduct and fraudulent scheme to lure U.S. military personnel into investing
Leroy Brown, Jr. made misrepresentations about securities licenses and registrations with SEC and FINRA
Leroy Brown, Jr. made misrepresentations about exorbitant returns guaranteed to investors including doubling or tripling money in less than 120 days
Leroy Brown, Jr. solicited investors to purchase $1,000 membership certificates in LB Stocks
LB Stocks and Trades Advice LLC offered and sold securities in violation of Sections 5(a), 5(c), and 17(a) of Securities Act of 1933 and Section 10(b) of Securities Exchange Act of 1934
SEC filed Complaint against Leroy Brown, Jr. and LB Stocks and Trades Advice LLC in U.S. District Court for Western District of Texas
Leroy Brown, Jr. is resident of Killeen, Texas
Leroy Brown, Jr. made misrepresentations about offices in New York City financial district and San Francisco
SEC seeks temporary emergency and preliminary relief, permanent injunctive relief, disgorgement of ill-gotten gains, accrued prejudgment interest, and civil monetary penalties
Leroy Brown, Jr. represents that he and LB Stocks trade stocks, mutual funds, ETFs, commodities, and foreign exchange currencies for clients

PDF

Complaint against Defendants Leroy Brown, Jr. and LB Stocks and Trades Advice LLC · Source

Text layers

Extracted body text (23,127c)

THEUNITEDSTATESDISTRICTCOURT
FORTHEWESTERNDISTRICTOFTEXAS
WACODIVISION
SECURITIESANDEXCHANGECOMMISSION,§
§
Plaintiff,§
§
v.§CaseNo.
§
LEROYBROWN,JR.and§
LBSTOCKSANDTRADESADVICELLC,§
§
Defendants.§
COMPLAINT
PlaintiffSecurities and Exchange Commission (the "Commission" or "SEC") files this
Complaint againstDefendantsLeroy Brown, Jr. and LB Stocks and Trades Advice LLC
(collectively"Defendants"),and alleges as follows:
SUMMARY
1.Since at least January 2014, Leroy Brown, Jr., a resident of Killeen, Texas (home
to the Fort Hoodmilitaryinstallation),hasengagedinfraudulentconduct andperpetrateda
fraudulentschemeto lurecurrentandformerU.S.militarypersonnelandothersintoinvesting
with him and his firm, LB Stocks and Trades Advice LLC ("LB Stocks" or the "Company").
2.Insolicitingprospectiveinvestors, Brown has made - andcontinuesto make -
numerous material misrepresentations and highly dubious claims about:
•securitieslicensesandregistrationsthatBrown,LBStocks,andrelatedcompanies
purportedlyhave with theSecuritiesandExchangeCommissionand the Financial
IndustryRegulatoryAuthority("FINRA");
•Brown's purportedexperienceas a broker in thefinancialservicesindustry;

purportedcompaniesowned by Brown and affiliated with LB Stocks that
purportedlyprovide a variety
ofinvestment-relatedservices, including investment
advice,portfoliomanagement,investmentresearch,andbrokerageservices;
•"stockbrokers" that LB Stocks allegedly employs and Brown purportedly trains;
•exorbitantreturns that investors areguaranteedto earnifthey invest with him
(includingdoublingor tripling investor money in less than 120 days);
•"affiliates,"corporateinvestors, and corporate partners with whom LB Stocks
purportedly maintains business relationships, including, among others, Walmart,
Apple, Sony, Microsoft, Best Buy, HP, USA Today, and McAfee; and
•offices that LB Stocks supposedly maintains in New YorkCity'sfinancial district
andinSanFrancisco.
3.Based on these intentionalmisrepresentations,Brown solicits investors to
purchase$1,000 membershipcertificatesin LB Stocks to participate in the Company'spurported
investments in undeveloped real estate that Brownguaranteeswill double or triple the investors'
investments. Brown also represents that he and LB Stocks trade stocks, mutual funds, exchange-
traded funds("ETFs"),commodities,and foreign exchange currencies for their clients.
4.Based on these activities and the conduct alleged below, Brown and LB Stocks
haveofferedand soldsecuritiesin violationof theantifraudandsecuritiesregistrationprovisions
ofthe federal securities laws, specifically Sections 5(a), 5(c), and 17(a)ofthe Securities Actof
1933("SecuritiesAct"), andSection10(b)of theSecuritiesExchangeAct of1934("Exchange
Act")and Rule10b-5thereunder.Additionally,unlessBrownand LBStocksareenjoinedby
this Court, they willcontinueto fraudulently offer and sell securities in violationoffederal law.
5.To protect the public from any further fraudulent activity and harm, the
Commissionbrings this actionagainstBrownand LBStocks,seeking:(i)temporaryemergency
andpreliminaryrelief;(ii)permanentinjunctiverelief;(iii)disgorgementofill-gottengains
SEC v. Leroy Brown, Jr., et al.
COMPLAINTPage2

from Defendants' violationsofthefederalsecurities laws; (iv) accrued prejudgment
intereston thoseill-gottengains; and (v) civil monetarypenalties.
JURISDICTIONANDVENUE
6.DefendantsBrownand LB Stocks offer and sellmembershipcertificatesin LB
Stocks to fund theCompany'spurportedpurchases
ofundevelopedtractsofland.Brown
promises investors that LB Stocks will"double"their originalinvestment,based solely on the
effortsofBrownand LBStocks.Thesemembershipcertificatesare"investmentcontracts"and
thereforesatisfythedefinitionofa "security"in Section 2(a)(1)oftheSecuritiesAct [15 U.S.C.
§ 77b] and Section 3(a)(10)ofthe Exchange Act [15 U.S.C. § 78c].Additionally,Brown and
LBStocksrepresentthatinvestorscanpurchase- throughLBStocks- stocks,bonds,mutual
funds,exchange-tradedfunds("ETFs"),commodities, and foreignexchangeinvestments. Thus,
the Court hasjurisdictionoverthis actionpursuantto Sections 20(b) and 22(a)oftheSecurities
Act [15 U.S.C. § 77t(b) and 77v(a)] and Sections 21(d), 21(e), and 27ofthe Exchange Act [15
U.S.C. §§ 78u(d), 78u(e), and 78(aa)].
7.Venue is proper because a substantial partofthe events or omissions giving rise
to theclaimsinthisactionoccurredwithintheWesternDistrictofTexas,WacoDivision.
DefendantLeroyBrown,Jr.residesinKilleen,Texas,andDefendantLBStocksandTrades
Advice LLCmaintainsits principal placeofbusiness in Temple, Texas.Both locations are
withinBell County,Texas,which iswithinthe WacoDivisionoftheWesternDistrictofTexas.
DEFENDANTS
8.LeroyBrown,Jr.,age 32, resides in Killeen, Texas. Fromapproximately2001
through July 2013, Brown was a member of the United States Army. Beginning at least as early
as January 2014, Brown began soliciting current and former membersofthe U.S. military to
SECv.Leroy Brown, Jr., et al.
COMPLAINTPage 3

their money with him and his company, LB Stocks and Trades Advice LLC. Brown is the
founder, managing member, andChiefExecutive OfficerofLB Stocks and Trades Advice LLC.
Brownis not, and hasneverbeen,licensedorregisteredin anycapacitywithFINRA,the SEC,
or any statesecuritiesregulator.
9.LBStocksandTradesAdviceLLC("LBStocks")is a limited liability
company organized under the lawsofthe state of Texas that maintains its offices and principal
placeofbusiness inTemple,Texas. LB Stocks is not, and never has been, registered with
FINRA, the SEC, or any state securities regulator. Similarly, LB Stocks has not registered any
offeringofitssecurities.
STATEMENTOFFACTS
10.Brown began his service in the U.S. Army inapproximatelyJune 2001, when he
was 18-years-old. He served for nearly 12 years until he was discharged in approximately July
2013.Prior to forming LB Stocks, Brown did not have any formal educational or work
experience in the financial services industry. In fact, Brown appears to be unknowledgeable
about the financial services industry, investments, and the securities industry generally.
BrownFormsLBStocksandTradesAdviceLLC
11.In April 2014, Brown legally formed LB Stocks, filing a CertificateofFormation
with the Texas SecretaryofState. Despite thistiming,Brown represents on hisFacebookpage
thathehasbeentheCEOandfounderofLBStockssince2004.
12.Moreover, Brown and LB Stocks dubiously claim that they "have been the
underdog in financial services for many years while we worked for big companies, nowit'sour
time to work for YOU as well as many that want to get ahead."
SECv.Leroy Brown, Jr., et al.
COMPLAINTPage4

Brownand LBStocksmakeotherspeciousclaimson LBStocks'websitesand
othermediathatreflecta basic misunderstanding
ofthe financialmarkets.Forexample,Brown
states on LBStocks'Facebookpage that,"[a]sof06/20/2014 LBStock&TradesAdvice is not
accepting any new clients. Also I will be getting a IPO meaning entering my company into the
stockmarketticketsymbolLBJ.Thankyou God.BOOMPOWBAM[.]"(errorsinoriginal).In
fact, there hasneverbeen an initial publicofferingofstockin LBStocks,nor is it a publicly
traded company. Moreover, the stock ticker symbol"LBJ"is already in use.
MisrepresentationsaboutProfessionalRegistrationsandLicensing
14.On the LBStockswebsite,Brownand LBStocksclaimtoprovide- through
purportedly affiliated companies - a varietyofsecurities and investment-related services,
includinginvestmentadvice, portfolio management, investment research, and brokerage services
forsecurities,currencies,commodities,and real estate. Inparticular,theyrepresentthat: (i) LB
SecuritiesLLC ("LBSecurities")provides
"[investmentrecommendations"and is"abroker-
dealermemberofFINRA;"(ii) LB Capital Management, LLC ("LBCapital")provides
"[p]ortfoliomanagementservices"and is "aninvestmentadviserregisteredwith theSEC;"and
(iii) LBStockshasstockbrokerstohandleclientaccountsto"makeit easytotradestocks,bonds,
ETFs,mutualfundsandmorebydoingit foryou."AsBrownknows,theseclaimsand
representationsare false.
15.LB Securities is not registered with FINRA in any capacity.Likewise, LB
Capital is notregisteredwith the SEC in any capacity. In fact, there is noevidencethat these
other"LB"Companiesevenexist.Thereisonlyone, lonereferenceto LBSecuritiesand LB
Capital on LB Stocks' website, and this language (in paragraph 14 above) was simply copied
from thewebsitesofE*TRADEandMyHouseDeals.com.
SECv.Leroy Brown, Jr., et al.
COMPLAINTPage 5

Similarly,Brownisnot:(i) licensed as asecuritiesprofessional;(ii)registered
withFINRAor any statesecuritiesregulator;or (iii)associatedwithanyentitythat isregistered
with FINRA, the SEC, or any state securities regulator. Likewise, LB Stocks is not registered
with FINRA or the SEC, nor is it affiliated with any registered entity. And, there are no brokers
who are registered representativesofLB Stocks or any other LB-related entity.
BrownandLBStocksMisrepresentMaterialFacts toIntentionally
MisleadInvestorsaboutLBStocks'LegitimacyandSuccess
17.Brown and LB Stocksfabricateafalseair oflegitimacyandsuccessbymaking
numerous misrepresentations to investors about LB Stocks' purported services and business
relationships.
18.For example, on the "Frequently Asked Questions" ("FAQ") page of LB Stocks'
website, Brown and LB Stocks represent, among other things, that:
•LB Stocks' "investment recommendations are provided by representatives from LB
SecuritiesLLC, abroker-dealermemberofFINRA;"
•LB Stocks' "[pjortfoliomanagementservices are provided by LBCapital
Management,LLC, aninvestmentadviserregisteredwiththeSEC;"
•LBStocks"offers 7,600leadingmutualfunds,includinghundredsofMorningstar
rated funds" and "every exchange-traded fund (ETF) sold;" and
•investors can "[t]rade over 200futuresproducts,includingindexes,metals, and
currencies using our professional-grade TT Trader platform, the first institutional-
quality futures trading platformavailableto individualtraders with no platform fees."
These representations about LB Securities and LB Capital are patentlyfalse.Neither
company is registered with FINRA or the SEC in any capacity. In fact, there is no evidence that
thesecompaniesevenexist,asBrownandLBStockssimplycopiedthesestatementsdirectly
from the FAQ page ofETRADE'swebsite -changingE*TRADE Securities andE*TRADE
CapitalManagementto LBSecuritiesand LBCapitalManagement,respectively.LB Stocks'
SECv.Leroy Brown, Jr., et al.
COMPLAINTPage6

aboutitspurportedbrokerageservicesfor mutual funds, ETFs, and futures -whichwere
alsocopieddirectlyfrom the FAQpage
ofE*TRADE'swebsites- are false as well.
19.Brown makes additional claims about LB Stocks' purported brokerage services,
includingstatementsthat:
•LBStocksis a"full-servicebrokerat yourconvenience;"
•Brown and LB Stocks have hired up to 63 "highly skilled and highly qualified
stockbrokers to handle client accounts" who will do "everything they need to
double[investors']money;"and
•Brownpersonallyholdsallsecuritieslicenses.
Theserepresentationsare false. LB Stocks is not registered with FINRA or the SEC in
any capacity, no brokers are registeredrepresentativesofLB Stocks (or any LB-related entity),
and Brown does not hold any securities licenses. All representations to the contrary are false.
20.Brown and LB Stocks also represent to prospective investors that: (i) LB Stocks
invests itsclients'money in the stock market; (ii) LBStocks'investmentsin the market are
insured; (iii) LB Stocks "always be in the green," implying that LB Stocks does not suffer
investment losses; and (iv) Walmart is one of LB Stocks' corporateinvestors.These
representationsare false or misleading.
21.Brown and LB Stocks further claim that LB Stocks is "the trusting [sic]custodian
of assets on behalf of more than 65,000 clients andgrowing"and that LB Stocks is a business
partnerwithseverallarge,well-knownglobalcompanies,includingWalmart,Apple,Microsoft,
HP, Sony, Best Buy, USA Today, McAfee, and CharityUSA.com.
22.Given that LB Stocks wasformedin April 2014 and Brown had no prior
experienceinfinancialserviceswhen heformedtheCompany,it isimprobablethat LBStocks
SECv.Leroy Brown, Jr., et al.
COMPLAINTPage7

more than 65,000clientsor that itmaintainsbusinessrelationshipswith these large, well-
knowncompanies.
23.Brownand LB Stocks alsorepresentthat LB Stocks hasofficesin (i)Temple,
Texas, (ii)NewYorkCity'sFinancialDistrict,and (iii) SanFrancisco.However,there is no
evidencethatBrownorLBStocksmaintainsofficesinNewYorkorSanFrancisco.
BrownandLBStocksTargetMembersoftheU.S.Military
24.Brown resides in Killeen, Texas, which is home to the Fort Hood military
installation.Insolicitinginvestors,Brown and LB Stockstargetcurrentand formermembersof
the U.S. military and their families by touting Brown's 12-year tenure in the U.S. Army. Brown
and LB Stocks also purport to provide investment services for U.S. military and other
government personnel, such as"MilitaryDeployment [and]RedeploymentInvestment
Solutions" and "Low Income Family Advice."Additionally,Brown and LB Stocks provide
severaltestimonials- on LBStocks'website and Facebook pages - fromindividualsthat claim
to be clients and current or former service members in the U.S. military, including some who are
orwerestationedatFortHood.
25.Brown and LB Stocks also solicit investors through the Company's mobile
application ("App") available from Amazon.com. In promoting this App, Brown states;
"I'mLeroy Brown CEOofLB S&T Advice . . . after being in the
army for more than 12 years, finishing ALT, WLC, ALC and SLC
never once finance was subject but I already was studying stocks,
mutual funds at a young age. By doing that I already setmyself
apart from the Army." (errors in original).
26.In aDecember19, 2014videopostedon LB Stocks'website,Brownrepeatedly
"guarantees"thatLBStockswill"doubleyourmoney."1HealsoclaimsthatLBStocks'
1Brownstates:(i)"Propertyinvestmentisdoubleyourinvestment....[Y]ouarealwaysguaranteedtogetdouble
yourmoney.If you sell it fortriple,youwillgettripleyourmoney[;]" (ii)"Smallbusinessinvestments....[W]e
SECv.Leroy Brown, Jr., et al.
COMPLAINTPage8

investments will "double your money in aconservative...way" and that "[y]ou cannot
lose in property investment." In addition, Brown's video presentation includes other false and
misleading written statements, including figures indicating that investors can expect todoubleor
tripletheir investments with LB Stocks.
BrownandLBStocksFraudulentlyInducesEquityInvestmentsinLBStocks
27.Brownand LBStockssolicitinvestorstopurchasemembershipcertificatesin the
Company for $1,000 per certificate. They claim that investors whopurchasethese certificates
willparticipatein LBStocks'speculativeinvestmentsin raw,undevelopedland.Brownfurther
representsthat he and LBStocksuse theinvestorfunds to finance 20percentofthepurchase
prices for theseinvestments.To purchase membership certificates, Brown and LB Stocks
encourageprospectiveinvestorstotransferfunds directly toBrownvia wiretransfer.
28.Brown further claims that he and LB Stocks will purchase, manage, and market
theundevelopedland for sale, and that, once thepropertiesare sold, LBStockswilldoubleeach
investor'soriginal investment.According to Brown, investors have three options for their
investments once they have been doubled by LB Stocks: (i) receive adistributionoffunds, (ii)
reinvestthe funds in newpropertiesallegedlypurchasedby LBStocks,and (iii)investin stocks,
commodities,and foreignexchangeinvestmentsthrough LB Stocks (or anaffiliate).
BrownandLBStocksObtainedInvestorFunds
29.Beginning in the first quarterof2014, Brown began receiving substantial deposits
offunds into hispersonalbrokerageaccount. These depositsshowthatBrownreceivedfunds
frominvestorswhointendedtoinvestin,orwith,LBStocks.In fact,wiretransferdetailsfor
severalofthese deposits specifically reference LB Stocks as the "Acct Party" in the receiving
invest into brand newbusinessesthat we manage....Before we put money into abusiness,we want to make sure
we have a positive return. On a positive return, guarantees you double your money."
SECv.Leroy Brown, Jr., etat
COMPLAINTPage 9

field -eventhoughthe funds weredepositedortransferreddirectlyintoBrown's
personalbrokerage account. Ultimately, Brown transferred nearly allofthese funds from his
personal brokerage account to his personal bank accounts.
FIRSTCLAIMFORRELIEF
ViolationsoftheAntifraudProvisionsoftheSecuritiesAct
Section17(a) [15U.S.C.§ 77q(a)]
[againstDefendantsLeroyBrown,Jr. andLBStocksandTradesAdviceLLC]
30.TheCommissionrepeats, re-alleges, andincorporatesby reference Paragraphs 1
through 29ofthisComplaint,asiffully set forth herein.
31.Byengagingin theconductdescribedherein,DefendantsLeroyBrown,Jr. and
LBStocksandTradesAdviceLLC,directlyorindirectly,singlyor inconcertwithothers,in the
offer or saleofsecurities,by useofthe means orinstrumentalitiesofinterstatecommerceorof
the mails,knowinglyorwithsevererecklessness,employeddevices,schemes,orartificesto
defraud.
32.Byengagingin theforegoingmisconduct,DefendantsLeroyBrown,Jr. and LB
Stocks andTradesAdviceLLC,directlyorindirectly,singly or inconcert,in theofferor sale
of
securities,by useofthemeansorinstrumentalitiesofinterstatecommerceorofthemails,and at
leastnegligently:(i)obtainedmoneyorpropertyby means
ofuntruestatementsofmaterialfact
or omitted to statematerialfactsnecessaryinorderto make thestatementsmade, in lightofthe
circumstancesunderwhichthey were made, notmisleading;and (ii)engagedintransactions,
practices, and/or coursesofbusiness which operate as a fraud or deceit upon purchasers,
prospectivepurchasers,andotherpersons.
33.DefendantsLeroyBrown,Jr. and LBStocksandTradesAdviceLLCmadethe
above-referencedmisrepresentationsandomissionsknowinglyor withsevererecklessnesswith
SECv.Leroy Brown, Jr., et at.
COMPLAINTPage10

for the truth.Defendantswere alsonegligentin their actions regarding therepresentations
andomissionsallegedherein.
34.Byengagingin thisconduct,DefendantsLeroyBrown,Jr. and LBStocksand
TradesAdviceLLC violated, and unless enjoined will continue to violate, Section 17(a)ofthe
SecuritiesAct [15 U.S.C. §77q(a)].
SECONDCLAIMFORRELIEF
ViolationsofAntifraudProvisionsoftheExchangeAct
Section10(b)[15U.S.C.§ 78j(b)]andRule10b-5 [17C.F.R.§ 240.10b-5]
[againstDefendants
LeroyBrown,Jr.andLBStocksandTradesAdviceLLC]
35.The Commission repeats, re-alleges, and incorporates by reference Paragraphs 1
through29ofthisComplaint,asiffully set forth herein.
36.By engaging in the foregoing misconduct, Defendants Leroy Brown, Jr. and LB
Stocks and Trades Advice LLC, in connection with the purchase or saleofsecurities, by useof
means or instrumentalitiesofinterstate commerce orofthe mails, orofany facilityofany
national securities exchange, directly or indirectly: (i) employed devices, schemes, or artifices to
defraud;(ii)madeuntruestatementsofmaterialfacts andomittedtostatematerialfacts
necessary in order to make the statements made, in lightofthe circumstances under which they
were made, notmisleading;and (iii)engagedin acts,practices,andcoursesofbusinesswhich
operate as a fraud ordeceitupon persons,includingpurchasersorsellersofsecurities.
37.DefendantsLeroyBrown,Jr. and LB Stocks andTradesAdviceLLC made the
above-referencedmisrepresentationsand omissions knowingly or with severe recklessness
regardingthetruth.
SEC v. Leroy Brown, Jr., et al.
COMPLAINTPage11

Byreasonoftheforegoing,DefendantsLeroyBrown,Jr. and LBStocksand
TradesAdviceLLCviolated,andunlessenjoinedwillcontinuetoviolate,Section10(b)
ofthe
ExchangeAct [15 U.S.C. §78j(b)]and Rule 10b-5thereunder[17C.F.R.§ 240.10b-5].
THIRDCLAIMFORRELIEF
ViolationoftheSecuritiesRegistrationProvisionsoftheSecuritiesAct
Section5(a)and5(c) [15U.S.C.§§ 77e(a)and77e(c)]
[against
DefendantsLeroyBrown,Jr.andLBStocksandTradesAdviceLLC]
39.TheCommissionrepeats, re-alleges, andincorporatesby reference Paragraphs 1
through 29ofthisComplaint,asiffully set forth herein.
40.Defendants Leroy Brown, Jr. and LB Stocks, directly or indirectly, singly or in
concert with others, have made useofthe means orinstrumentsoftransportationor
communicationin interstatecommerce,orofthe mails, to offer and sell securities, through the
useofwrittencontracts,offeringdocuments,andotherwise,when noregistrationstatements
were filed or in effect as to such securities, and when noexemptionfrom registration was
applicable.
41.Byreason
oftheforegoing,DefendantsLeroyBrown,Jr. and LBStockshave
violated and, unlessenjoined,willcontinueto violateSections5(a) and 5(c)oftheSecuritiesAct
[15U.S.C.§§77e(a)and77e(c)].
PRAYERFORRELIEF
For thesereasons,theCommissionrespectfullyrequeststhat this Court enter a final
judgment:
a.TemporarilyandpermanentlyenjoiningLeroyBrown,Jr. and LBStocksand
Trades Advice LLC from violating Sections 5(a), 5(c), and 17(a)ofthe Securities
Act andSection10(b)oftheExchangeAct and Rule 10b-5thereunder;
SECv.Leroy Brown, Jr., et al.
COMPLAINTPage 12

andpermanentlyenjoiningLeroy Brown. Jr. and LB Stocks and
TradesAdviceLLC from,directlyorindirectly,includingbut notlimitedto
through any entity owned or controlled by Brown or LB Stocks: (a) participating
in the issuance, purchase, offer, or saleofany security, and (b)solicitingmoney
for any trading insecurities;provided,however,that suchinjunctionshall not
preventBrown or LB Stocks frompurchasingor sellingsecuritiesfor their own
personalaccounts;
OrderingLeroyBrown,Jr. and LBStocksandTradesAdviceLLC todisgorgean
amount equal to the funds and benefits they obtained illegally as a resultofthe
violationsallegedherein, plusprejudgmentintereston thatamount;
OrderingLeroyBrown,Jr. and LBStocksandTradesAdviceLLC to pay civil
monetarypenalties,pursuanttoSection20(d)
oftheSecuritiesAct [15 U.S.C. §
77t(d)]andSections21(d)
oftheExchangeAct [15 U.S.C. §78u(d)],for their
violationsofthefederalsecuritieslaws asallegedherein:and
Grantingsuchadditionalreliefas theCourtdeemsjust,appropriate,andequitable.
DATED:April
13,2015
SEC v. Leroy Brown. Jr., et al.
COMPLAINT
Respectfullysubmitted,
B.EhWIDFRASER
TexasBarNo.24012654
CHRISTOPHERW.AHART
TexasBarNo.24036115
SECURITIESANDEXCHANGECOMMISSION
BurnettPlaza,Suite1900
801CherryStreet.Unit#18
FortWorth,TX76102-6882
(817)978-1409(BDF)
(817)978-4927(fax)
[email protected]
ATTORNEYSFORPLAINTIFF
SECURITIESANDEXCHANGECOMMISSION
Pase

OCR text (25,248c · tika · 95% conf)

THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF TEXAS

WACO DIVISION

SECURITIES AND EXCHANGE COMMISSION, §

§
Plaintiff, §

§
v. § Case No.

§
LEROY BROWN, JR. and §
LB STOCKS AND TRADES ADVICE LLC, §

§
Defendants. §

COMPLAINT

Plaintiff Securities and Exchange Commission (the "Commission" or "SEC") files this

Complaint against Defendants Leroy Brown, Jr. and LB Stocks and Trades Advice LLC

(collectively "Defendants"), and alleges as follows:

SUMMARY

1. Since at least January 2014, Leroy Brown, Jr., a resident of Killeen, Texas (home

to the Fort Hood military installation), has engaged in fraudulent conduct and perpetrated a

fraudulent scheme to lure current and former U.S. military personnel and others into investing

with him and his firm, LB Stocks and Trades Advice LLC ("LB Stocks" or the "Company").

2. In soliciting prospective investors, Brown has made - and continues to make -

numerous material misrepresentations and highly dubious claims about:

• securities licenses and registrations that Brown, LB Stocks, and related companies
purportedly have with the Securities and Exchange Commission and the Financial
Industry Regulatory Authority ("FINRA");

• Brown's purported experience as a broker in the financial services industry;

Case 6:15-cv-00119 Document 1 Filed 04/13/15 Page 1 of 13

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• "stock brokers" that LB Stocks allegedly employs and Brown purportedly trains;

• exorbitant returns that investors are guaranteed to earn if they invest with him
(including doubling or tripling investor money in less than 120 days);

• "affiliates," corporate investors, and corporate partners with whom LB Stocks
purportedly maintains business relationships, including, among others, Walmart,
Apple, Sony, Microsoft, Best Buy, HP, USA Today, and McAfee; and

• offices that LB Stocks supposedly maintains in New York City's financial district
and in San Francisco.

3. Based on these intentional misrepresentations, Brown solicits investors to

purchase $1,000 membership certificates in LB Stocks to participate in the Company's purported

investments in undeveloped real estate that Brown guarantees will double or triple the investors'

investments. Brown also represents that he and LB Stocks trade stocks, mutual funds, exchange-

traded funds ("ETFs"), commodities, and foreign exchange currencies for their clients.

4. Based on these activities and the conduct alleged below, Brown and LB Stocks

haveoffered and sold securities in violation of the antifraud and securities registration provisions

of the federal securities laws, specifically Sections 5(a), 5(c), and 17(a) of the Securities Act of

1933 ("Securities Act"), and Section 10(b) of the Securities Exchange Act of 1934 ("Exchange

Act") and Rule 10b-5 thereunder. Additionally, unless Brown and LB Stocks are enjoined by

this Court, they will continue to fraudulently offer and sell securities in violation of federal law.

5. To protect the public from any further fraudulent activity and harm, the

Commission brings this action against Brown and LB Stocks, seeking: (i) temporary emergency

and preliminary relief; (ii) permanent injunctive relief; (iii) disgorgement of ill-gotten gains

SEC v. Leroy Brown, Jr., et al.
COMPLAINT Page 2

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from Defendants' violations of the federal securities laws; (iv) accrued prejudgment

interest on those ill-gotten gains; and (v) civil monetary penalties.

JURISDICTION AND VENUE

6. Defendants Brown and LB Stocks offer and sell membership certificates in LB

Stocks to fund the Company's purported purchases of undeveloped tracts of land. Brown

promises investors that LB Stocks will "double" their original investment, based solely on the

efforts of Brown and LB Stocks. These membership certificates are "investment contracts" and

therefore satisfy the definition of a "security" in Section 2(a)(1) of the Securities Act [15 U.S.C.

§ 77b] and Section 3(a)(10) of the Exchange Act [15 U.S.C. § 78c]. Additionally, Brown and

LB Stocks represent that investors can purchase - through LB Stocks - stocks, bonds, mutual

funds, exchange-traded funds ("ETFs"), commodities, and foreign exchange investments. Thus,

the Court has jurisdiction over this action pursuant to Sections 20(b) and 22(a) of the Securities

Act [15 U.S.C. § 77t(b) and 77v(a)] and Sections 21(d), 21(e), and 27 of the Exchange Act [15

U.S.C. §§ 78u(d), 78u(e), and 78(aa)].

7. Venue is proper because a substantial part of the events or omissions giving rise

to the claims in this action occurred within the Western District of Texas, Waco Division.

Defendant Leroy Brown, Jr. resides in Killeen, Texas, and Defendant LB Stocks and Trades

Advice LLC maintains its principal place of business in Temple, Texas. Both locations are

within Bell County, Texas, which is within the Waco Division of the Western District of Texas.

DEFENDANTS

8. Leroy Brown, Jr., age 32, resides in Killeen, Texas. From approximately 2001

through July 2013, Brown was a member of the United States Army. Beginning at least as early

as January 2014, Brown began soliciting current and former members of the U.S. military to

SEC v. Leroy Brown, Jr., et al.
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their money with him and his company, LB Stocks and Trades Advice LLC. Brown is the

founder, managing member, and Chief Executive Officer of LB Stocks and Trades Advice LLC.

Brown is not, and has never been, licensed or registered in any capacity with FINRA, the SEC,

or any state securities regulator.

9. LB Stocks and Trades Advice LLC ("LB Stocks") is a limited liability

company organized under the laws of the state of Texas that maintains its offices and principal

place of business in Temple, Texas. LB Stocks is not, and never has been, registered with

FINRA, the SEC, or any state securities regulator. Similarly, LB Stocks has not registered any

offering of its securities.

STATEMENT OF FACTS

10. Brown began his service in the U.S. Army in approximately June 2001, when he

was 18-years-old. He served for nearly 12 years until he was discharged in approximately July

2013. Prior to forming LB Stocks, Brown did not have any formal educational or work

experience in the financial services industry. In fact, Brown appears to be unknowledgeable

about the financial services industry, investments, and the securities industry generally.

Brown Forms LB Stocks and Trades Advice LLC

11. In April 2014, Brown legally formed LB Stocks, filing a Certificate of Formation

with the Texas Secretary of State. Despite this timing, Brown represents on his Facebook page

that he has been the CEO and founder of LB Stocks since 2004.

12. Moreover, Brown and LB Stocks dubiously claim that they "have been the

underdog in financial services for many years while we worked for big companies, now it's our

time to work for YOU as well as many that want to get ahead."

SEC v. Leroy Brown, Jr., et al.
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Brown and LB Stocks make other specious claims on LB Stocks' websites and

other media that reflect a basic misunderstanding of the financial markets. For example, Brown

states on LB Stocks' Facebook page that, "[a]s of 06/20/2014 LB Stock&Trades Advice is not

accepting any new clients. Also I will be getting a IPO meaning entering my company into the

stock market ticket symbol LBJ. Thank you God. BOOM POW BAM[.]" (errors in original). In

fact, there has never been an initial public offering of stock in LB Stocks, nor is it a publicly

traded company. Moreover, the stock ticker symbol "LBJ" is already in use.

Misrepresentations about Professional Registrations and Licensing

14. On the LB Stocks website, Brown and LB Stocks claim to provide - through

purportedly affiliated companies - a variety of securities and investment-related services,

including investment advice, portfolio management, investment research, and brokerage services

for securities, currencies, commodities, and real estate. In particular, they represent that: (i) LB

Securities LLC ("LB Securities") provides "[investment recommendations" and is "a broker-

dealer member of FINRA;" (ii) LB Capital Management, LLC ("LB Capital") provides

"[p]ortfolio management services" and is "an investment adviser registered with the SEC;" and

(iii) LB Stocks has stockbrokers to handle client accounts to "make it easy to trade stocks, bonds,

ETFs, mutual funds and more by doing it for you." As Brown knows, these claims and

representations are false.

15. LB Securities is not registered with FINRA in any capacity. Likewise, LB

Capital is not registered with the SEC in any capacity. In fact, there is no evidence that these

other "LB" Companies even exist. There is only one, lone reference to LB Securities and LB

Capital on LB Stocks' website, and this language (in paragraph 14 above) was simply copied

from the websites of E*TRADE and MyHouseDeals.com.

SEC v. Leroy Brown, Jr., et al.
COMPLAINT Page 5

Case 6:15-cv-00119 Document 1 Filed 04/13/15 Page 5 of 13

Similarly, Brown is not: (i) licensed as a securities professional; (ii) registered

with FINRA or any state securities regulator; or (iii) associated with any entity that is registered

with FINRA, the SEC, or any state securities regulator. Likewise, LB Stocks is not registered

with FINRA or the SEC, nor is it affiliated with any registered entity. And, there are no brokers

who are registered representatives of LB Stocks or any other LB-related entity.

Brown and LB Stocks Misrepresent Material Facts to Intentionally
Mislead Investors about LB Stocks' Legitimacy and Success

17. Brown and LB Stocks fabricate a false air of legitimacy and success by making

numerous misrepresentations to investors about LB Stocks' purported services and business

relationships.

18. For example, on the "Frequently Asked Questions" ("FAQ") page of LB Stocks'

website, Brown and LB Stocks represent, among other things, that:

• LB Stocks' "investment recommendations are provided by representatives from LB
Securities LLC, a broker-dealer member of FINRA;"

• LB Stocks' "[pjortfolio management services are provided by LB Capital
Management, LLC, an investment adviser registered with the SEC;"

• LB Stocks "offers 7,600 leading mutual funds, including hundreds of Morningstar
rated funds" and "every exchange-traded fund (ETF) sold;" and

• investors can "[t]rade over 200 futures products, including indexes, metals, and
currencies using our professional-grade TT Trader platform, the first institutional-
quality futures trading platform available to individual traders with no platform fees."

These representations about LB Securities and LB Capital are patently false. Neither

company is registered with FINRA or the SEC in any capacity. In fact, there is no evidence that

these companies even exist, as Brown and LB Stocks simply copied these statements directly

from the FAQ page of ETRADE's website - changing E*TRADE Securities and E*TRADE

Capital Management to LB Securities and LB Capital Management, respectively. LB Stocks'

SEC v. Leroy Brown, Jr., et al.
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Case 6:15-cv-00119 Document 1 Filed 04/13/15 Page 6 of 13

about its purported brokerage services for mutual funds, ETFs, and futures - which were

also copied directly from the FAQ page of E*TRADE's websites - are false as well.

19. Brown makes additional claims about LB Stocks' purported brokerage services,

including statements that:

• LB Stocks is a "full-service broker at your convenience;"

• Brown and LB Stocks have hired up to 63 "highly skilled and highly qualified
stockbrokers to handle client accounts" who will do "everything they need to
double [investors'] money;" and

• Brown personally holds all securities licenses.

These representations are false. LB Stocks is not registered with FINRA or the SEC in

any capacity, no brokers are registered representatives of LB Stocks (or any LB-related entity),

and Brown does not hold any securities licenses. All representations to the contrary are false.

20. Brown and LB Stocks also represent to prospective investors that: (i) LB Stocks

invests its clients' money in the stock market; (ii) LB Stocks' investments in the market are

insured; (iii) LB Stocks "always be in the green," implying that LB Stocks does not suffer

investment losses; and (iv) Walmart is one of LB Stocks' corporate investors. These

representations are false or misleading.

21. Brown and LB Stocks further claim that LB Stocks is "the trusting [sic] custodian

of assets on behalf of more than 65,000 clients and growing" and that LB Stocks is a business

partner with several large, well-known global companies, including Walmart, Apple, Microsoft,

HP, Sony, Best Buy, USA Today, McAfee, and CharityUSA.com.

22. Given that LB Stocks was formed in April 2014 and Brown had no prior

experience in financial services when he formed the Company, it is improbable that LB Stocks

SEC v. Leroy Brown, Jr., et al.
COMPLAINT Page 7

Case 6:15-cv-00119 Document 1 Filed 04/13/15 Page 7 of 13

more than 65,000 clients or that it maintains business relationships with these large, well-

known companies.

23. Brown and LB Stocks also represent that LB Stocks has offices in (i) Temple,

Texas, (ii) New York City's Financial District, and (iii) San Francisco. However, there is no

evidence that Brown or LB Stocks maintains offices in New York or San Francisco.

Brown and LB Stocks Target Members of the U.S. Military

24. Brown resides in Killeen, Texas, which is home to the Fort Hood military

installation. In soliciting investors, Brown and LB Stocks target current and former members of

the U.S. military and their families by touting Brown's 12-year tenure in the U.S. Army. Brown

and LB Stocks also purport to provide investment services for U.S. military and other

government personnel, such as "Military Deployment [and] Redeployment Investment

Solutions" and "Low Income Family Advice." Additionally, Brown and LB Stocks provide

several testimonials - on LB Stocks' website and Facebook pages - from individuals that claim

to be clients and current or former service members in the U.S. military, including some who are

or were stationed at Fort Hood.

25. Brown and LB Stocks also solicit investors through the Company's mobile

application ("App") available from Amazon.com. In promoting this App, Brown states;

"I'm Leroy Brown CEO of LB S&T Advice . . . after being in the
army for more than 12 years, finishing ALT, WLC, ALC and SLC
never once finance was subject but I already was studying stocks,
mutual funds at a young age. By doing that I already set myself
apart from the Army." (errors in original).

26. In a December 19, 2014 video posted on LB Stocks' website, Brown repeatedly

"guarantees" that LB Stocks will "double your money."1 He also claims that LB Stocks'

1Brown states: (i) "Property investment is double your investment. ... [Y]ou are always guaranteed to get double
your money. If yousell it for triple, youwill get triple your money[;]"(ii)"Small business investments. ... [W]e

SEC v. Leroy Brown, Jr., et al.
COMPLAINT Page 8

Case 6:15-cv-00119 Document 1 Filed 04/13/15 Page 8 of 13

investments will "double your money in a conservative . .. way" and that "[y]ou cannot

lose in property investment." In addition, Brown's video presentation includes other false and

misleading written statements, including figures indicating that investors can expect to double or

triple their investments with LB Stocks.

Brown and LB Stocks Fraudulently Induces Equity Investments in LB Stocks

27. Brown and LB Stocks solicit investors to purchase membership certificates in the

Company for $1,000 per certificate. They claim that investors who purchase these certificates

will participate in LB Stocks' speculative investments in raw, undeveloped land. Brown further

represents that he and LB Stocks use the investor funds to finance 20 percent of the purchase

prices for these investments. To purchase membership certificates, Brown and LB Stocks

encourage prospective investors to transfer funds directly to Brown via wire transfer.

28. Brown further claims that he and LB Stocks will purchase, manage, and market

the undeveloped land for sale, and that, once the properties are sold, LB Stocks will double each

investor's original investment. According to Brown, investors have three options for their

investments once they have been doubled by LB Stocks: (i) receive a distribution of funds, (ii)

reinvest the funds in new properties allegedly purchased by LB Stocks, and (iii) invest in stocks,

commodities, and foreign exchange investments through LB Stocks (or an affiliate).

Brown and LB Stocks Obtained Investor Funds

29. Beginning in the first quarter of 2014, Brown began receiving substantial deposits

of funds into his personal brokerage account. These deposits show that Brown received funds

from investors who intended to invest in, or with, LB Stocks. In fact, wire transfer details for

several of these deposits specifically reference LB Stocks as the "Acct Party" in the receiving

invest into brand new businesses that we manage .... Before we put money into a business, we want to make sure
we have a positive return. On a positive return, guarantees you double your money."

SEC v. Leroy Brown, Jr., et at
COMPLAINT Page 9

Case 6:15-cv-00119 Document 1 Filed 04/13/15 Page 9 of 13

field - even though the funds were deposited or transferred directly into Brown's

personal brokerage account. Ultimately, Brown transferred nearly all of these funds from his

personal brokerage account to his personal bank accounts.

FIRST CLAIM FOR RELIEF

Violations of the Antifraud Provisions of the Securities Act

Section 17(a) [15 U.S.C. § 77q(a)]

[against Defendants Leroy Brown, Jr. and LB Stocks and Trades Advice LLC]

30. The Commission repeats, re-alleges, and incorporates by reference Paragraphs 1

through 29 of this Complaint, as if fully set forth herein.

31. By engaging in the conduct described herein, Defendants Leroy Brown, Jr. and

LB Stocks and Trades Advice LLC, directly or indirectly, singly or in concert with others, in the

offer or sale of securities, by use of the means or instrumentalities of interstate commerce or of

the mails, knowingly or with severe recklessness, employed devices, schemes, or artifices to

defraud.

32. By engaging in the foregoing misconduct, Defendants Leroy Brown, Jr. and LB

Stocks and Trades Advice LLC, directly or indirectly, singly or in concert, in the offer or sale of

securities, by use of the means or instrumentalities of interstate commerce or of the mails, and at

least negligently: (i) obtained money or property by means of untrue statements of material fact

or omitted to state material facts necessary in order to make the statements made, in light of the

circumstances under which they were made, not misleading; and (ii) engaged in transactions,

practices, and/or courses of business which operate as a fraud or deceit upon purchasers,

prospective purchasers, and other persons.

33. Defendants Leroy Brown, Jr. and LB Stocks and Trades Advice LLC made the

above-referenced misrepresentations and omissions knowingly or with severe recklessness with

SEC v. Leroy Brown, Jr., et at.
COMPLAINT Page 10

Case 6:15-cv-00119 Document 1 Filed 04/13/15 Page 10 of 13

for the truth. Defendants were also negligent in their actions regarding the representations

and omissions alleged herein.

34. By engaging in this conduct, Defendants Leroy Brown, Jr. and LB Stocks and

Trades Advice LLC violated, and unless enjoined will continue to violate, Section 17(a) of the

Securities Act [15 U.S.C. § 77q(a)].

SECOND CLAIM FOR RELIEF

Violations of Antifraud Provisions of the Exchange Act
Section 10(b) [15 U.S.C. § 78j(b)] and Rule 10b-5 [17 C.F.R. § 240.10b-5]

[against Defendants Leroy Brown, Jr. and LB Stocks and Trades Advice LLC]

35. The Commission repeats, re-alleges, and incorporates by reference Paragraphs 1

through 29 of this Complaint, as if fully set forth herein.

36. By engaging in the foregoing misconduct, Defendants Leroy Brown, Jr. and LB

Stocks and Trades Advice LLC, in connection with the purchase or sale of securities, by use of

means or instrumentalities of interstate commerce or of the mails, or of any facility of any

national securities exchange, directly or indirectly: (i) employed devices, schemes, or artifices to

defraud; (ii) made untrue statements of material facts and omitted to state material facts

necessary in order to make the statements made, in light of the circumstances under which they

were made, not misleading; and (iii) engaged in acts, practices, and courses of business which

operate as a fraud or deceit upon persons, including purchasers or sellers of securities.

37. Defendants Leroy Brown, Jr. and LB Stocks and Trades Advice LLC made the

above-referenced misrepresentations and omissions knowingly or with severe recklessness

regarding the truth.

SEC v. Leroy Brown, Jr., et al.
COMPLAINT Page 11

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By reason of the foregoing, Defendants Leroy Brown, Jr. and LB Stocks and

Trades Advice LLC violated, and unless enjoined will continue to violate, Section 10(b) of the

Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5].

THIRD CLAIM FOR RELIEF

Violation of the Securities Registration Provisions of the Securities Act
Section 5(a) and 5(c) [15 U.S.C. §§ 77e(a) and 77e(c)]

[against Defendants Leroy Brown, Jr. and LB Stocks and Trades Advice LLC]

39. The Commission repeats, re-alleges, and incorporates by reference Paragraphs 1

through 29 of this Complaint, as if fully set forth herein.

40. Defendants Leroy Brown, Jr. and LB Stocks, directly or indirectly, singly or in

concert with others, have made use of the means or instruments of transportation or

communication in interstate commerce, or of the mails, to offer and sell securities, through the

use of written contracts, offering documents, and otherwise, when no registration statements

were filed or in effect as to such securities, and when no exemption from registration was

applicable.

41. By reason of the foregoing, Defendants Leroy Brown, Jr. and LB Stocks have

violated and, unless enjoined, will continue to violate Sections 5(a) and 5(c) of the Securities Act

[15 U.S.C. §§ 77e(a) and 77e(c)].

PRAYER FOR RELIEF

For these reasons, the Commission respectfully requests that this Court enter a final

judgment:

a. Temporarily and permanently enjoining Leroy Brown, Jr. and LB Stocks and
Trades Advice LLC from violating Sections 5(a), 5(c), and 17(a) of the Securities
Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder;

SEC v. Leroy Brown, Jr., et al.
COMPLAINT Page 12

Case 6:15-cv-00119 Document 1 Filed 04/13/15 Page 12 of 13

Ordering Leroy Brown, Jr. and LB Stocks and Trades Advice LLC to disgorge an
amount equal to the funds and benefits they obtained illegally as a result of the
violations alleged herein, plus prejudgment interest on that amount;

Ordering Leroy Brown, Jr. and LB Stocks and Trades Advice LLC to pay civil
monetary penalties, pursuant to Section 20(d) of the Securities Act [15 U.S.C. §
77t(d)] and Sections 21(d) of the Exchange Act [15 U.S.C. § 78u(d)], for their
violations of the federal securities laws as alleged herein: and

Granting such additional relief as the Court deems just, appropriate, and equitable.

DATED: April 13,2015

SEC v. Leroy Brown. Jr., et al.
COMPLAINT

Respectfully submitted,

B. EhWID FRASER

Texas Bar No. 24012654

CHRISTOPHER W. AHART

Texas Bar No. 24036115

SECURITIES AND EXCHANGE COMMISSION

Burnett Plaza, Suite 1900
801 Cherry Street. Unit #18
Fort Worth, TX 76102-6882
(817) 978-1409 (BDF)
(817) 978-4927 (fax)
[email protected]

ATTORNEYS FOR PLAINTIFF

SECURITIES AND EXCHANGE COMMISSION

Pase

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