On August 25, 2021, the Securities and Exchange Commission (the “Plaintiff” or the “SEC”), represented by Wm. Shawn Murnahan, attorney at the SEC’s Atlanta regional office, filed a civil enforcement action against William B. McHenry, Jr. (“McHenry”) and First South Investments, LLC (“First South'') (collectively “Defendants”), seeking permanent enjoinment of the Defendants along with civil penalties among other reliefs for alleged sale of unregistered securities. This case was filed in the U.S. District Court in the Southern District of Mississippi with Judges Carlton W. Reeves and F. Keith Ball presiding.
In the complaint, the Plaintiff alleged that, “Starting in at least 2010, William B. McHenry, Jr (“McHenry”), operating directly and through his solely-owned entity, First South Investments, LLC (“First South”) (collectively “Defendants”), sold millions of dollars in unregistered promissory notes fraudulently offered by Arthur Lamar Adams (“Adams”) and Madison Timber Properties, LLC (“Madison Timber”). In selling these unregistered securities, Defendants regularly engaged in the business of effecting securities transactions for others, but failed to register as brokers.”
The Plaintiff further alleged that, “Defendants sold approximately promissory 159 notes to at least 28 investors that resulted in Madison Timber investments between thirty-one and thirty-four million dollars. McHenry earned a 10% commission on those note sales and a monthly stipend that ultimately brought him over three million dollars in commissions.”
The Plaintiff further alleged that, “The promissory notes were not registered as securities with the Commission. Neither McHenry nor First South were registered as brokers with the Commission.”
The SEC even further alleged that, “By engaging in the conduct described above, Defendants made use of the mails or other means or instrumentalities of interstate commerce to effect
transactions in, or to induce the purchase or sale of securities while not registered with the Commission as a broker or when they were not associated with an entity registered with the Commission as a broker or dealer.”
There are two claims for relief laid down by the Plaintiff. The first claim deals with alleged violation of section 5(a) and 5(c) of the Exchange Act for selling unregistered securities. The second claim is for alleged violation of section 15(a) of the Exchange Act [15 U.S.C. § 78o(a)].
In its prayer for relief, the Plaintiff has requested the Court to find that the Defendants violated the registration provisions of the federal securities laws as alleged herein, and permanently enjoin the Defendants from violating Section 5 of the Securities Act [15 U.S.C. §§ 77q(a)] and Section 15(a) of the Exchange Act [15 U.S.C. § 78o(a)]. The SEC further requested the Court to order the Defendants to pay a civil monetary penalty, and an award granting such other relief as this Court may deem just and proper.
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Pending - Other Pending
Carlton W. Reeves
F. Keith Ball
Securities and Exchange Commission
William B. McHenry, Jr.
First South Investments, LLC
Wm. Shawn Murnahan-Federal Gov
Attorney at U. S. SECURITIES AND EXCHANGE COMMISSION - Atlanta
950 East Paces Ferry Road, Ne, Suite 900
Atlanta, GA 30325
(#2) Summons Issued as to First South Investments, LLC, William B. McHenry, Jr. (KNS) (Entered: 08/27/2021)
Civil Cover Sheet
Docket(#2) Summons Issued as to First South Investments, LLC, William B. McHenry, Jr. (KNS) (Entered: 08/27/2021)Read MoreRead Less
Docket(#1) COMPLAINT against First South Investments, LLC, William B. McHenry, Jr., filed by Securities and Exchange Commission. (Attachments: #1 Civil Cover Sheet)(KNS) (Entered: 08/27/2021)Read MoreRead Less
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