* Mortgage pioneer's firm used unregistered broker
* No admission of wrongdoing
By Jonathan Stempel and Emily Flitter
March 11 A private equity firm founded by
mortgage bond pioneer Lewis Ranieri has agreed to pay $375,000
to settle U.S. Securities and Exchange Commission charges that
it employed an unregistered broker to help solicit roughly $569
million of investments.
The settlement with Ranieri Partners LLC and two Illinois
residents resolves allegations over the activities of William
Stephens, a consultant who was paid $2.42 million for helping
bring in investments for its Selene funds between February 2008
and March 2011.
According to the SEC, Stephens offered strategy analyses and
key documentation to prospective clients, going "far beyond"
what should have been his limited role in acting as a "finder"
who would make initial introductions.
The SEC said Donald Phillips, a Ranieri senior managing
director who oversaw capital raising for the New York-based firm
prior to his December 2012 resignation, aided the violations by
providing materials to Stephens and ignoring "red flags" about
his longtime friend's improper conduct.
"Stephens acted outside the boundaries of the law, and
Phillips and the firm ignored the essence of his activities,"
Merri Jo Gillette, director of the SEC regional office in
Chicago, said in a statement.
Phillips, 63, who lives in Barrington, Illinois, agreed to
pay a $75,000 penalty. Stephens, a 60-year-old resident of
Hinsdale, Illinois, agreed to a securities industry ban.
None of the defendants admitted or denied wrongdoing, but
the SEC said Ranieri Partners has modified its policies to help
prevent a recurrence.
A lawyer for Ranieri and Phillips did not immediately
respond to a request for a comment.
Stephens could not immediately be reached. The SEC waived
his responsibility to repay the $2.42 million plus $410,000 of
interest, citing his financial condition.
Lewis Ranieri was a former head of the mortgage department
at Salomon Brothers, and was a central figure in Michael Lewis'
1989 book "Liar's Poker." Michael Lewis credited Ranieri and
Salomon with almost single-handedly creating the mortgage bond
Founded in 2007, Ranieri Partners invests in financial
companies and real estate. Among its other top executives is
Thomas O'Neill, a founding principal of investment banking firm
Sandler O'Neill & Partners. Neither Lewis Ranieri nor O'Neill
was charged with or accused of wrongdoing in the SEC case.
The cases are In re: Ranieri Partners LLC et al, SEC
Administrative Proceeding, No. 3-15234; and In re: Stephens, SEC
Administrative Proceeding, No. 3-15233.