‘Fool-Proof’ Investment Lands SEC Charges For William Harrison, Eddie Sawyers

William Harrison and Eddie Sawyers are entering the new year facing securities fraud charges. On Dec. 17, the Securities and Exchange Commission (SEC) charged the two former Wachovia brokers of violating the antifraud provisions of federal securities laws.

According to the complaint, the violations occurred between December 2007 and October 2008. During that period, the SEC says Harrison and Sawyers “used misrepresentations and omissions of material fact” to defraud at least 42 Wachovia brokerage customers of at least $8 million.

The complaint goes on to allege that on or around December 2007, Harrison and Sawyers, acting under the d/b/a “Harrison/Sawyers Financial Services,” began offering their Wachovia customers an investment opportunity that they characterized as a “fool-proof investment” that would result in 35% returns, with no risk of loss of principal.

Harrison and Sawyers actually were involved in risky trading options. The strategies were never revealed to their clients, however. Instead, Harrison and Sawyers either opened accounts with optionsXpress in the client’s name or commingled the client’s funds in accounts opened in Harrison’s wife’s name or a joint account in the name of Harrison and his wife, Deana.

By October 2008, the two men had depleted the vast majority of the money they had raised from investors.  On October 13, 2008, Harrison submitted his letter of resignation to his employer, Wachovia, and confessed to “misdirecting” $6.6 million from 17 of his Wachovia customers in order to trade online.  He also admitted to conducting online trading without first securing the authorization from his customers.

Harrison’s cohort, Sawyers, resigned from Wachovia one day later.

Harrison and Sawyers have about three weeks to reply to the SEC’s charges.