Action to Preserve Investor Assets in Transfer Agent Fraud

Beginning in 2012, defendant Illinois Stock Transfer Company, a registered transfer agent, and its owner, Pearson, misappropriated more than $1.3 million belonging to corporate clients and the clients’ shareholders, in order to fund their own payroll and business obligations. In addition, under Pearson’s direction, IST allegedly committed multiple violations of the SEC’s transfer agent rules, such as failing to safeguard funds and securities and to report lost and stolen securities. The SEC detected the fraud through its transfer agent inspection program, and brought suit resulting in an asset freeze, receivership and a permanent injunction. The case was still pending at the time of this writing/summary.