Feds File Securities Fraud Charges Against Paxton
Investigators with the U.S. Securities Exchange Commission have filed formal charges against Texas Attorney General Ken Paxton. The charges allege Paxton promoted investment in a North Texas tech start-up without informing anyone that they he was being paid to promote the company.
While serving in the Texas House of Representatives, Paxton solicited close to a million dollars in investment funds for the company Servergy, Inc. He received a hundred-thousand shares of stock in return according to court documents.
In a written statement, the SEC Regional Director Shamoil Shipmaker said Paxton profited from misleading investors.
Shipmaker wrote, “People recruiting investors have a legal obligation to disclose any compensation they are receiving to promote a stock, and we allege that Paxton concealed the compensation he was receiving for touting Servergy’s product.”
Speaking through his defense attorney, Phillip Hilder, Paxton says he denied the civil charges and looked forward to his day in court.
“We believe this is a “pile on” lawsuit, the SEC has been aware of these allegations since the criminal charges have been filed," Hilder said.
Paxton also faces state criminal charges for similar securities fraud violations.