Banker with house in Watch Hill accused of stock fraud
Banker with house in Watch Hill accused of stock fraud
February 27, 2014 09:45AM
By DALE P. FAULKNER
Sun Staff Writer
A Wall Street investment banker who maintains a residence in Watch Hill is facing federal charges of insider trading.
Frank Perkins “Perk” Hixon Jr. was arrested Friday and charged with insider trading offenses and making false statements to FBI agents. Hixon and his wife, Marguerite L. Lee, own a residence at 23 Foster Cove Road in Watch Hill. Hixon also has an apartment on Fifth Avenue in Manhattan and is a member of The Misquamicut Club, a prestigious social and athletic club in Watch Hill.
According to a press release from the FBI, Hixon, 55, was charged with five counts of securities fraud, two counts of securities fraud in connection with a tender offer, and one count of making a false statement.
He is accused of using information he gained through his position at Evercore Group LLC, an investment banking advisory firm, to arrange for securities trading to benefit his girlfriend, Destiny “Nicole” Robinson, and his father. The alleged illegal trading earned almost $1 million, a press release from the U.S. Securities and Exchange Commission said.
Hixon has owned the Foster Cove Road residence since 1997. It has an appraised value of $7.2 million. Leaders of The Misquamicut Club, where Hixon has been a member since 1995, did not return telephone messages seeking comment. The exclusive club has a rigorous application process. Candidates are proposed by a member or certain other individuals and must receive a second. Three letters of recommendation also are required.
Those seeking membership must also submit a letter describing their place of residence, family members, character and personality highlights. Once it is determined that a candidate is sufficiently well known by other club members and other aspects of the preliminary application process are deemed complete, a formal application is made to the club. Those who receive preliminary acceptance embark on a three-year or longer process of working toward full membership.
Hixon is a former senior managing director of Evercore Group LLC, a subsidiary of Evercore Partners Inc. He is alleged to have used inside information to trade and cause others to trade in the securities of Evercore, Westway Group Inc., and Titanium Metals Corp.
Manhattan U.S. Attorney Preet Bharara said, “As we have often said, those like Frank Perkins Hixon Jr. who illegally manipulate the market by allegedly trading on material nonpublic information exploit law-abiding investors and traders.”
According to the SEC and the FBI, Hixon made illegal trades minutes after learning of transactions involving Evercore and Titanium Metals. When his firm confronted him about the trading, Hixon Jr. pretended not to recognize the names of his father or his child’s mother. However, text messages between Hixon Jr. and Robinson suggest he was generating the illegal proceeds in lieu of formal child support payments, the SEC said.
A federal judge granted the SEC’s request and issued an emergency order freezing Robinson’s brokerage account, which the SEC alleges contains the majority of proceeds from Hixon Jr.’s illegal trading with a balance of approximately $1.2 million.
According to the SEC’s complaint, Hixon Jr. illegally tipped or traded in the securities of three public companies: He traded ahead of several major announcements by his client Westway Group in 2011 and 2012; he traded based on nonpublic information he learned about Titanium ahead of its merger announcement in November 2012; and he illegally traded in the securities of his own firm before its announcement of record earnings in January 2013.
The SEC’s complaint alleges that Hixon Jr. violated the antifraud provisions of the Securities Exchange Act of 1934. In addition to the asset freeze, the complaint seeks permanent injunctions, disgorgement of ill-gotten gains with prejudgment interest, and financial penalties. Hixon Sr. and Robinson have been named as relief defendants for the purposes of recovering the illegal trading profits held in their accounts. Robinson lives in Austin, Texas. Hixon Sr. lives in Johns Creek, Ga.
William Johnson, a lawyer for Hixon at King & Spalding in Manhattan, could not be reached for comment.
There was no answer at Hixon’s Watch Hill residence on Wednesday. On Friday a federal magistrate set bail at $5 million. It was unclear Wednesday whether Hixon remains in custody or whether he made bail.
Evercore issued a statement on Friday calling Hixon a “rogue employee” and said it had fired him last month, the New York Times reported.
The securities fraud and fraud in connection with a tender offer charges each carry a maximum term of 20 years in prison, and the false statement charge carries a maximum term of five years.
FBI Assistant Director in Charge George Venizelos said, “This is the same old song: another high-ranking finance official allegedly broke the law and abused his position in a thinly veiled attempt to make illegal trades. The alleged use of material information gleaned through confidential meetings at Evercore was deceptive and more importantly illegal. When Hixon was confronted about his back door trades, he allegedly doubled down and lied to the FBI agents who interviewed him. The integrity of our markets remains a paramount concern of the FBI. We’ll continue to pursue these cases until that message is crystal clear.”