O'ahu broker charged with bilking widows

By Dan Nakaso
Advertiser Staff Writer

In the first case of its kind in at least a decade, the Securities and Exchange Commission has charged a Honolulu broker with defrauding two widowed retirees and assessed penalties against his firm and its former top officer for failing to adequately supervise him and another broker.

Braxton G. Grizzard will be suspended from working with any broker or dealer for a year, as of April 22. He was working with Alamo, Calif.-based Round Hill Securities Inc., which the SEC censured for failing to properly supervise Grizzard and a Beverly Hills-based broker.

The SEC also ordered the company to pay $100,000 in penalties and assessed a $25,000 fine against its former president and CEO.

Grizzard, 49, works in Honolulu and is now associated with Brookstreet Securities Corp., which is based in Irvine, Calif., according to the SEC. Grizzard could not be reached for comment yesterday.

The SEC charged that between November 1996 and February 1998, two of Grizzard's clients had losses of $36,184 and paid commissions of $37,443. They were living on limited incomes and were "unsophisticated investors with conservative investment objectives," the SEC said.

Grizzard excessively traded or "churned" one client's account and engaged in short-term trading, "all of which was unsuitable for her in light of her conservative investment objectives," the SEC said. He also bought securities on margin without the client's "informed consent or knowledge."

Grizzard concentrated 92 percent to 100 percent of the other woman's portfolio in bonds that were below investment grade, the SEC said, "which was unsuitable for her given her conservative investment objectives."

One of the women still lives in Honolulu. The other moved to Texas in 1999.

"In the last 10 years the SEC has not sued a registered representative in Hawai'i for the kind of conduct that Braxton Grizzard committed," said Carolyn Samiere, the SEC staff attorney who handled the case.

The SEC also ordered that Grizzard be barred from handling discretionary accounts, trading on margin, trading in options, and trading in bonds below investment grade for five years after the end of his one-year suspension.

All of the people named in the SEC complaint consented to the order without admitting or denying its findings, the SEC said.

Reach Dan Nakaso at dnakaso@honoluluadvertiser.com or 525-8085.