Robert Gist (Gist) was recently fined $5.4 million by the Securities and Exchange Commission (SEC) and barred from association with any broker-dealer by the Financial Industry Regulatory Authority (FINRA). Gist has been accused by both regulators of converting the funds of at least 30 customers in order to pay personal expenses and to fund the operations of a company controlled by Gist.
Gist resides in Atlanta, Georgia and is the president of Gist, Kennedy & Associates, Inc., (Gist Kennedy) a law firm specializing in estate planning and investments. Gist is licensed to practice law in Georgia and has represented professional athletes as a sports agent. From approximately 2002 through early 2013, Gist was CEO and president ENCAP Technologies, LLC (ENCAP), a company with its principal place of business in Roswell, Georgia. ENCAP is in the business of developing industrial coatings for metal surfaces to prevent corrosion. Gist has been associated or registered with numerous brokerage firms since the 1980s. Most recently, Gist was registered with Resource Horizons Group LLC from March 2001 until his December 2011.
On May 31, 2013, the SEC charged Gist and Gist Kennedy with defrauding at least 32 customers out of at least $5.4 million while acting as an unregistered broker from approximately 2003 to the present. According to the SEC’s complaint filed in the U.S. District Court for the Northern District of Georgia, Gist told customers that he would invest their funds conservatively on their behalves in corporate bonds and other securities. However, according to the SEC Gist invested none of the customer funds, but, instead, used the funds for his personal expenses.
Gist also used the proceeds to pay dividends and proceeds from securities sales that he falsely claimed to have purchased on behalf of his customers. Gist also used customer funds to support ENCAP’s business operations. Contrary to the representations Gist made to customers concerning the purchase of securities, Gist is alleged to have used at least $2.2 million of the converted customer funds for the operation of ENCAP while the company gave nothing of value in return for the use of the money. The SEC further alleged that Gist regularly created and provided customers with fictitious account statements in order to conceal the fraud.
Without admitting or denying the SEC’s allegations, defendants Gist and Gist Kennedy settled the SEC case against them. The defendants consented to the entry of an order permanently enjoining Gist and Gist Kennedy from future violations of the fraud provision under Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rules 10b-5. Gist and Gist Kennedy also agreed to be jointly and severally liable for $5.4 million in disgorgement plus prejudgment interest, the imposing of civil penalties to be determined upon motion of the Commission, freezing the Defendants’ assets, and the provision of other relief. Subsequently, FINRA barred Gist from the securities industry.
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