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SEC Charges A.L. Waters Capital With Creating Phony Private Placements

Arnett L. Waters, a Massachusetts resident, and his broker-dealer, A.L. Waters Capital LLC (“Waters Capital”), have been charged by the Securities and Exchange Commission (“SEC”) with creating bogus private placements – Port Huron Partners LP and Port Huron Partners II LP (collectively “Port Huron Funds”) – and bilking investors out of at least $780,000. Mr. Waters’ wife, Janet Lee Waters, the compliance officer of Waters Capital, has also been named as a relief defendant in the case.

The Complaint filed by the SEC last week alleges that that Waters offered investors a chance to participate in the phony private placements through Waters Capital’s website. The SEC claims that investors received conflicting marketing materials and offering memoranda. The Complaint states that some marketing materials depict the Port Huron Funds as dealing in precious metals and coins or securities focused on precious metals, while others describe the Port Huron Funds as hedge funds trading in global, preferred stocks and corporate and government bonds.

In addition, the SEC alleged that Waters Capital claimed the Port Huron Funds had $180 million in assets under management as of January 2010, but the Port Huron Funds’ account was closed in March 2009 and never held more than $52,000.

In response to the SEC, Waters allegedly told the SEC that no one had invested in the Port Huron Funds, but the SEC claims that at least 8 clients invested more than $780,000, including one church. The SEC alleges that investors’ funds were used to pay the Waters’ personal and business expenses, including payments on a horse farm, the bills of an equine veterinarian, and restaurants.

Investors nationwide who have been the victim of financial fraud, may contact the Florida securities arbitration attorneys at McCabe Rabin, P.A. for a free and confidential consultation by calling toll free at 877.915.4040 or by e-mail to kelly@mccaberabin.com.

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