The Securities and Exchange Commission (SEC) has secured final rulings against Thomas D. Renison and Timothy J. Allcott, the proprietors of ARO Equity, LLC. The duo faced allegations of misappropriating funds from new investors to pay off older ones and misleading investors about their firm’s financial health. The court has mandated Renison and Allcott to pay a collective sum of $12,348,181, although this amount is considered settled due to forfeiture and restitution orders in related criminal cases.
The SEC initiated legal action against the two in January 2020. The complaint revealed that Renison, a resident of Connecticut, had been barred by the SEC from associating with any broker-dealer or investment advisor since July 2014. Nevertheless, Renison and Allcott, both Massachusetts residents, established ARO Equity as an investment advisory firm between July 2015 and June 2018, raising approximately $6 million from a minimum of 15 investors.
Contrary to being transparent about ARO Equity’s financial setbacks, Renison and Allcott continued to inflate the firm’s achievements and the safety of investing with them. They purportedly assured investors that their investments were as secure as bank deposits and boasted of double-digit returns. In reality, ARO Equity was incurring significant losses and was reliant on new investors to pay returns to existing ones.
Criminal charges were also filed against both Allcott and Renison for their alleged misconduct. Allcott pleaded guilty to his charges on July 27, 2020, and was sentenced to 30 months in prison on May 8, 2023. He was also ordered to pay restitution of $6,098,198.30. Renison entered his guilty plea on October 6, 2020, and received a 48-month prison term on May 8, 2023, along with a restitution order of $6,249,983.30.
On July 27, 2023, the U.S. District Court for the District of Massachusetts issued final judgments against both individuals. These judgments permanently bar them from violating various sections of the Securities Act of 1933, the Securities Exchange Act of 1934, and the Investment Advisers Act of 1940. They are indefinitely restricted from engaging in any securities transactions, except for managing their own personal accounts.
Despite the prison terms, the SEC opted not to request additional civil monetary penalties against the defendants. Legal proceedings against ARO Equity are still underway.
This case serves as a potent reminder for investors to proceed with caution and thorough due diligence before entrusting their savings to investment firms. It also underscores the vital role that regulatory bodies like the SEC play in protecting investor interests and maintaining the stability of financial markets.
