Investor losses, investigations prompt action
BY FRANK NORTON
Of The Post and Courier Staff
The state Attorney General's Office has enlisted a seasoned corporate lawyer as its top securities watchdog, filling a position of greatly expanded authority at a time of heightened concern over securities fraud.
T. Stephen Lynch, a partner with Columbia-based Nelson Mullins Riley and Scarborough, is expected to start in his new role Oct. 13, overseeing the enforcement of state securities codes, investigations into possible violations, licensing procedures for securities brokers and investor education.
The expansion of the attorney general's securities division was prompted by the loss of millions of investor dollars earlier this year when Carolina Investors and its parent company, HomeGold Financial of Pickens, filed for bankruptcy. The filing prompted state investigations, which are continuing, into possible securities fraud.
In a move to crack down on potentially illegal practices, state legislators in June tripled the securities division's budget to more than $1.5 million and extended the jurisdiction of the state grand jury to include securities fraud, giving it the power of subpoena in securities investigations.
Attorney General Henry McMaster, for his part, expanded the division's criminal and civil enforcement staff to 21 in the past four months and plans to increase that number to 30 by next year.
"Prior to the changes, we were spending less on securities regulation than any other state in the country," McMaster said. "This should increase the reliability of our securities industry and ultimately boost public confidence in our investment climate."
He said ongoing state and federal probes into suspected trading abuses by hedge funds and mutual funds, including Bank of America's Nations Fund, have fueled the office's commitment to zero tolerance when it comes to illegal securities dealings.
Lynch could not be reached for comment Friday.
Before working with Nelson Mullins, Lynch headed corporate law divisions at Wachovia Bank and South Carolina National Bank. He is a journalism and law graduate of the University of South Carolina and has more than 25 years' experience in corporate governance, bank regulation, securities law and other legal disciplines.
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