The Worst Person in The World: Broker Who Defrauded Nuns
Sometimes its good to remember that there are real villains in the world. On Thursday, the SEC fined one villain named Paul George Chironis and barred him from acting a stockbroker for life.
His alleged wrongdoing? Cheating nuns.
Here's how the SEC describes his misdeeds.
"Chironis took advantage of the trust placed in him by the Sisters of Charity and convinced the nuns to engage in a high turnover trading strategy unfit for their investment needs," said George S. Canellos, Director of the SEC's New York Regional Office. "Chironis's irresponsible actions virtually guaranteed the convent's accounts would lose money due to the undisclosed and excessive costs being incurred while Chironis focused on generating substantial commissions for himself."
According to the SEC's order, Chironis defrauded the nuns from January 2007 to January 2008, by churning the two accounts with low-risk tolerance that held primarily mortgage-backed securities issued by Ginnie Mae, Fannie Mae, and Freddie Mac, as well as certain closed-end bond funds. The order further found that Chironis charged the nuns' accounts excessive and undisclosed markups and markdowns in riskless principal transactions.
Chironis charged the nuns approximately 10.8 percent of the value of their accounts in transaction fees. Of course, a real cynic could look at that and say that Chironis' real mistake was not charging those fees, but calling himself a broker instead of hedge-fund manager. The SEC declined to provide information about the returns on the nuns' portfolio.
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