| NEW YORK
NEW YORK Feb 24 U.S. prosecutors have reached a
deferred prosecution agreement with a Securities and Exchange
Commission examiner charged with making false statements about
his stock holdings that were prohibited under SEC ethics rules,
according to a court filing made public Monday.
The U.S. attorney's office in Manhattan disclosed in the
filing that it has agreed to enter into the deal with defendant
Steven Gilchrist, who was arrested in November and charged with
three counts of making false statements. Gilchrist, a veteran of
the SEC's New York office, faced a maximum of 15 years in prison
on those charges.
In deferred prosecution agreements, the government can agree
to delay or forgo prosecution if a company or individual meets
certain conditions - for instance, admitting wrongdoing,
cooperating with investigations, paying a fine or agreeing not
to violate the law. If not, the government can prosecute the
The filing indicated that the U.S. Probation Office is
investigating whether Gilchrist can be supervised during the
period of deferral. The terms of the agreement were not
The U.S. attorney's office in New York and an attorney for
Gilchrist were not immediately available for comment on Monday
SEC ethics rules prohibit employees from buying or holding
stocks in entities that it regulates. Employees are also
required to get approval from the SEC's ethics office before
According to the criminal complaint, Gilchrist allegedly
held stocks in companies including Bank of America,
Morgan Stanley and MBIA Inc.
Although he was told by the SEC ethics office to sell the
holdings, Gilchrist allegedly transferred the shares to a joint
account held with his mother, which he controlled, and used that
account to buy shares of JP Morgan without disclosing or
seeking approval for the purchase, the complaint said.
U.S. prosecutors alleged that Gilchrist lied to the SEC
several times about his stock holdings, stating that he no
longer held prohibited stock and that he was in compliance with
Following his arrest in November, Gilchrist surrendered his
travel documents and was released on his own recognizance.
(Reporting by Jessica Dye; Editing by Kenneth Maxwell)