SEC staffer charged with lying about his stock holdings

A woman waits for an elevator in the foyer of the Fort Worth Regional Office of the Securities and...

A woman waits for an elevator in the foyer of the Fort Worth Regional Office of the Securities and Exchange Commission (SEC) in Fort Worth, Texas June 28, 2012. Picture taken June 28, 2012. (REUTERS/Mike Stone)

Sarah N. Lynch, Reuters

, Last Updated: 8:17 PM ET


A U.S. Securities and Exchange Commission examiner was charged on Tuesday with making false statements about his stock holdings that were prohibited under SEC ethics rules, U.S. prosecutors said.

Steven Gilchrist, 48, a veteran staffer in the SEC's New York office, was arrested on Tuesday morning and was due to appear in court in the afternoon, U.S. Attorney for the Southern District of New York Preet Bharara and SEC Inspector General Carl Hoecker said in a joint statement.

Gilchrist was charged with three counts of making false statements and faces a maximum sentence of 15 years in prison.

An attorney for Gilchrist could not immediately be reached.

"As an SEC examiner, Steven Gilchrist had a duty to avoid conflicts of interest that might compromise or even appear to compromise his integrity," Bharara said. "He violated the SEC's internal rules about stock ownership and repeatedly lied to the SEC about his holdings."

SEC ethics rules prohibit employees from buying or holding stocks in entities regulated by the SEC, such as banks or brokerage firms.

According to the criminal complaint, Gilchrist held stock in Bank of America, Citigroup, Morgan Stanley, Ambac Financial Group and MBIA Inc.

Although the SEC's ethics office had told him he must divest the holdings, the complaint alleges that he transferred the shares into a joint account he held with his mother.

He also used the joint account to buy shares of JP Morgan , but never disclosed the purchase or sought clearance in advance from the ethics office, according to the complain.

Despite the fact he still held the stock in these companies, U.S. prosecutors allege that Gilchrist indicated in ethics filings with the SEC that he no longer held the prohibited stock.

"We are very disappointed that an employee allegedly made false statements to conceal prohibited holdings after being told by our ethics office to divest," SEC spokesman John Nester said.