Securities and Exchange Commission v. John T. Place, et al.
Analysis Group was retained by the US Securities and Exchange Commission (SEC) in its prosecution of the brokerage firm Global Transition Solutions (GTS) and three of its former officers for securities fraud. The SEC alleged that John Kirk, Paul Kirk, and John Place – GTS’s president, general counsel, and executive officer, respectively – misled clients and prospective clients by failing to adequately disclose all of the firm’s sources of compensation from transition management services performed between October 2006 and February 2014, in violation of the Securities Exchange Act of 1934 and Rule 10b-5.
An Analysis Group team led by Managing Principal Lauren R. Kindler supported Affiliate John R. Minahan, who filed an expert report evaluating the transitions managed by GTS, including GTS’s disclosures related to its fees and actual fees earned. Dr. Minahan opined that on multiple occasions, the defendants earned revenue from transactions, in the form of markups and markdowns, that was not disclosed to the firm’s clients, representing a conflict of interest and a failure to meet their fiduciary duties.
Both the SEC and the defendants sought summary judgment. US District Judge Michael Baylson of the Eastern District of Pennsylvania, relying in part on Dr. Minahan’s submission, granted partial summary judgment to the SEC, holding that “[t]he record reflects that statements in client contracts and other communications failed to disclose the true nature of client costs and the revenue GTS earned.” The case was subsequently settled.