[ by Howard Haykin ]

The SEC barred the President, CEO, and owner of a Massachusetts-based broker-dealer and its affiliated registered investment adviser, following the defendant's guilty plea to criminal charges brought by the U.S. Attorney for the District of Massachusetts. 

Profile of Defendant.   Arnett Waters, 62, a resident of Milton, MA, was associated with various brokerage firms off and on from 1983 to 1993, when he was censured and barred for 2 years by the NYSE.  From April 2005 through March 9, 2012, he ran A.L. Waters Capital, LLC, a broker-dealer, and Moneta Management, LLC, an investment adviser registered with the Commission.  He was permanently barred from the industry by FINRA for failing to provide testimony in a FINRA investigation. 

SEC Findings.   Waters, a defendant in a securities fraud action filed by the SEC in May 2012, pled guilty to criminal charges brought by the U.S. Attorney for the District of Massachusetts on 11/29/12.  As a result of the guilty plea, the SEC barred Waters from the securities industry.  The November guilty plea follows an earlier guilty plea by Waters in October 2012 to criminal contempt charges for violating a preliminary injunction order obtained by the Commission in its case.

On 11/29/12, Waters pleaded guilty to 16 counts of securities fraud, mail fraud, money laundering, and obstruction of justice.  The counts of the criminal information to which Waters pleaded guilty alleged that, from at least 2007 through 2012, he used fictitious investment-related partnerships to draw in investors, misappropriate their investment money, and spend the vast majority of it on personal and business expenses and debts. 

Waters raised at least $839,000 from at least 13 investors, including $500,000 from his church in March 2012.  Waters further pleaded guilty to engaging in a criminal scheme to defraud clients of his rare coin business. 

• Waters defrauded coin customers out of as much as $7.8 million.
• He did so by selling coins at prices inflated - on average by 600% - and by inducing coin purchasers to return coins to him, on the false representation that he would sell those coins on the customers' behalf.
• Upon selling most or all of the coins, Waters kept the proceeds for himself.

The criminal information to which Waters pleaded guilty further alleged that he engaged in money laundering through 2 transactions totaling $77,000.  He also pleaded guilty to allegations that he made multiple misrepresentations to Commission staff, including that there were no investors in his investment-related partnerships, in order to conceal the fact that investor money was misappropriated in a fraudulent scheme. Waters is charged with obstruction of justice related to this conduct.

Waters has been detained since October 2, 2012, when the Court ordered him held pending sentencing in the criminal contempt action. He is currently scheduled to be sentenced in April 2013 in connection with the guilty pleas in the 2 separate criminal actions against him.

For further details, go to:  [SEC Litigation Release 22558, 12/4/12] and [Exchange Act Release 34-68334, 12/3/12].