Former Canadian Broker’s Securities Fraud Conviction Involving U.S. Transactions is Upheld

The United States Court of Appeals for the Third Circuit has upheld the securities fraud conviction of George Georgiou. The ex-Canadian broker was convicted of U.S. stock manipulation involving brokerage accounts in his native country and international locations.

Georgiou, who appealed the conviction, said that under the U.S. Supreme Court decision Morrison v. National Australia Bank Ltd., his conviction is not allowed because there is no evidence that the securities transactions took place in United States. This means, he argued, that extra-territorially was applied in his case.

In the Morrison ruling, the deeming of transactions as domestic isn’t determined by the location of the fraud’s origination, but rather, where the securities were sold and bought. The Third Circuit, therefore, decided to hold that the sale and purchase of securities happens where “irrevocable liability” to execute them is incurred. The court said that irrevocable liability includes where the contracts were formed, purchase orders were made, money was exchange, and titles were passed.

The circuit court examined whether the transactions involved in Georgiou’s case could be considered domestic ones. It determined that while in Morrison, in which every aspect of the trade transactions happened outside this country, Georgiou dealt with stocks of American companies and some trades happened through market makers in U.S. Also, some stocks were sold or purchased at Georgiou’s order from entities based in the country.

The SSEK Partners Group represents high net worth individuals and institutional clients that wish to recover their investor fraud losses.

Third Circuit Upholds Securities Fraud Conviction of Canadian Stock Broker Where “Irrevocable Liability” for Transactions Occurred in the United States, National Law Review, January 23, 2015

Morrison v. Australia National Bank (PDF)

Georgiou Gets 25 Years in Prison for Penny Stock Fraud, Bloomberg, November 19, 2010

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