Last week, the SEC announced that it had taken emergency action to charge Gordon B. Grigg and his firm ProTrust Management with fraud. The SEC alleges that Grigg, of Nashville, TN, defrauded his clients out of at least $6.5 million. In doing so, the SEC complaint alleges that Grigg and his company “preyed upon investors’ desire for safety by claiming associations with reputable investment firms and the government’s TARP program.” The accusation is that Grigg obtained control over funds of at least 27 clients since 2007 and falsely claimed to have invested their money in securities described as “Private Placements.” In December 2008, the complaint alleges, Grigg claimed that he could invest in government-guaranteed commercial paper and bank debt as part of the TARP program.

This enforcement action is proceeding in the U.S. District Court for the Middle District of Tennessee, with the SEC seeking a temporary restraining order, a freeze and accounting of funds and assets, expedited discovery, disgorgement and financial penalties.