SEC v. Bandfield, et al.

Violations Charged

Section 13, Rule 13d-1, aiding and abetting, control-person liability

Case Overview

Robert Bandfield and IPC Corporate Services ran an offshore business in Belize that hid clients' microcap stock behind a pyramid of Nevis limited liability companies and Belize international business companies. Clients paid substantial fees for the structure, and IPC installed its own employees as the nominal owners, holding undated resignation letters so Bandfield kept control of every entity.

The point of the pyramid was evading U.S. disclosure law. Anyone who beneficially owns more than 5% of a public company's stock must report it, so IPC advised clients to split their holdings across multiple companies and multiple brokerages to stay under the trigger. Bandfield and Godfrey explained the entire structure, on tape, to an undercover federal agent posing as a client. The parallel criminal case charged the operation as a $500 million securities fraud and money laundering scheme.

Outcome

The court entered a default judgment permanently enjoining IPC, Bandfield, and Godfrey from further ownership-reporting violations. A parallel criminal case, charging a $500 million securities fraud and money laundering scheme, was brought by the U.S. Attorney's Office for the Eastern District of New York.