SEC settles $1M reinsurance fraud litigationReprints
A Connecticut man has agreed to pay more than $1 million to settle Securities and Exchange Commission litigation in which he was charged with using two companies in the reinsurance industry to raise funds from retail investors.
The SEC said in a statement Thursday that David S. Haddad operated two New London, Connecticut-based companies, Trafalgar Square Risk Management L.L.C. and New England RE L.L.C.
The agency said he began raising money from investors through the offer and sale of unregistered securities in Trafalgar in or before 2012 and for New England RE in late 2014. He raised more than $2.5 million from at least 29 separate investors, the SEC said.
Trafalgar has purported variously to be a stop-loss insurance sales underwriting consulting and marketing firm and a private investment firm, while New England RE was established to market, underwrite and bind stop-loss insurance coverage to self-insured employers, according to the complaint.
The SEC said Mr. Haddad made various misleading claims to investors about their funds’ use, including that they would be used to grow the two companies, when in fact he diverted a significant portion of the investors’ money for his own purposes, including the purchase of multiple homes, art and antiques, entertainment and the expenses of a dog rescue charity he founded.
The SEC said Mr. Haddad and the two companies have agreed to the settlement without admitting or denying the allegations in the SEC’s complaint.
Mr. Haddad’s attorney could not immediately be reached for comment.