Annapolis investment firm sued Money for securities diverted, SEC says

October 01, 1993|By Marcia Myers | Marcia Myers,Staff Writer

An Annapolis investment company headed by Joshua Fry, host of a Washington-area radio program that provides financial advice, was accused in a civil lawsuit yesterday of misappropriating a "substantial" amount of its clients' money.

Stock and Options Services Inc., which has about 170 clients and manages about $6 million, has misused the funds since November 1991, according to the lawsuit, filed by the Securities and Exchange Commission in U.S. District Court in Baltimore.

Substantial amounts intended for the purchase of securities were instead diverted to Mr. Fry; his wife, Nancy Booth; and his son, Joshua Fry Jr., the lawsuit said.

An employee of Stock and Options Services (SOS) said yesterday that Mr. Fry was unavailable to comment on the suit and referred questions to a New York lawyer, Anthony A. Capetola.

"The only thing I can say right now is that we deny the allegations," said Mr. Capetola, who said he had not seen the suit.

Neither Ms. Booth nor Joshua Fry Jr. could be reached for comment yesterday.

Donald M. Hoerl, district administrator with the SEC, said yesterday it was difficult to determine a precise amount of funds that were allegedly misappropriated because the company had not kept many of the records required by the commission.

"Without such records, it is impossible to assess SOS's current financial condition, its obligations to investors or its own investment activity," the lawsuit said.

Between April and June of this year, Mr. Fry deposited about $332,000 in clients' funds that were to have purchased securities. Only $102,000 was used for that purpose, the lawsuit alleges, while the remainder was misappropriated. Some of that money was used to finance a horse-racing business, Whip Stables, operated by Mr. Fry and Ms. Booth, the lawsuit said.

Mr. Fry is host of a weekly radio program called "Exercise Your Options," during which he answers caller questions about investing and options trading, the lawsuit said.

Mr. Fry also solicited investments in the Good Till Cancelled Fund, which was described to investors as a limited partnership engaged in buying and selling options and Treasury bills. The fund was actually a device used to misappropriate investor funds, the lawsuit said.

Since November 1991, Mr. Fry has raised at least $475,000 from 30 investors for the Good Till Cancelled Fund, the lawsuit said. But most of that money has not been used to trade options as investors were told, according to the SEC lawsuit.

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