District Circular Letters

November 13, 2001

BANKING SUPERVISION AND REGULATION:
SEC ACTION AGAINST ROBERT L. BENTLEY

To State Member Banks,
Bank Holding Companies,
and Others Concerned,
in the Twelfth Federal Reserve District

SEC Action Against Robert L. Bentley, Bentley Financial Services, and Entrust Group (SR 01-26)

An enforcement action was recently taken by the SEC against Robert L. Bentley and his companies, Entrust Group and Bentley Financial Services (collectively, "Bentley"). The action alleges that Bentley is committing fraud in the sales of securities to financial institutions, including banks, thrifts and credit unions, and to individual investors. In particular, the SEC alleges that Bentley is representing to investors that it is selling bank-issued federally insured certificates of deposit when, in the opinion of the SEC, Bentley is selling uninsured and unregistered securities. The SEC also charges that, in many cases, old investors were repaid with new investors' funds.

On October 24, 2001, the SEC obtained a federal court order freezing Bentley's assets and appointing a receiver to take possession of its assets. A copy of the SEC's press release may be obtained on the SEC website at http://www.sec.gov/litigation/litreleases/lr17201.htm. The order states in principal part that:

Any bank, financial or brokerage institution or other person or entity holding any funds, securities or other assets in the name of, for the benefit of, or under the direct or indirect control of defendants Robert L. Bentley, Bentley Financial Services, Inc, Entrust Group, or their officers, directors, or those persons in active concert or participation with them, and each of them, shall hold and retain within their control and prohibit the withdrawal, removal, transfer or other disposal of any such funds or other assets of defendants.

All state member banks that have any active business relationship with Bentley, whether as an investor or issuer of certificates of deposit, should contact the appropriate Federal Reserve Bank with detailed information regarding the amount and terms of the applicable investment instrument. In addition, all state member banks that hold any funds, securities, or other assets in the name of or for the benefit of Bentley are advised to take the steps necessary to comply with the federal court order. Further, all state member banks that have invested funds through Bentley are advised to confer with counsel about the appropriate course of action for their organizations, including contacting the court-appointed receiver about their investments. The order appoints David H. Marion, Esq., with the firm of McCraken, Walker & Rhodas LLP as the receiver. The receiver may be reached at (215) 772-7434.

Additional Information

All circulars and documents are available on the Internet through the Federal Reserve Bank of San Francisco's Internet site, at http://www.frbsf.org/banking/letters. Paper copies of the Board's notice (SR 01-26) are available from our Corporate Services Department. To request copies to be sent by mail, please call (415) 974-2060.

For additional information about the enforcement action against Bentley, please contact our Banking Supervision and Regulation Department at (415) 974-2911.

FEDERAL RESERVE BANK OF SAN FRANCISCO