Southmark Saga Still Waging in Court

SEC-registered brokerage firm Southmark Inc. was still duking it out in court with the Securities and Exchange Commission on Nov. 21, nearly a week after a preliminary injunction hearing began in federal court.

U.S. Senior District Judge James Ellison began hearing evidence on Nov. 15 and continued through the next week. The SEC’s case against Southmark and its SEC-registered investment advisor arm, Southmark Advisory Inc., alleges that their owner, Wendell D. Belden, defrauded more than 400 mostly elderly investment clients.

Belden, who in September opened a Bentonville branch, has denied any wrong doing. The Arkansas Securities Department had received no complaints as of Nov. 21 about Southmark.

But on Nov. 1 the SEC shut Southmark’s doors in both state’s and appointed Tulsa lawyer John Dowdell to oversee the firms’ business. In its Oct. 29 lawsuit, the SEC claims that Southmark used a “bait and switch” gimmick that lured investors with high-yielding certificates of deposit, then pressure-sold them on high-load mutual funds.

A 22-page report outlining the Oklahoma Securities Commission’s findings is available at www.securities.state.ok.us.

On Nov. 8, the OSC barred Belden from practicing in the state and suspended three of his colleagues including Gertrude M. Edwards, the Bentonville office manager. Edwards’ suspension lasts 60 days and carries a $5,000 civil penalty.

Southmark’s upscale 5,000-SF Bentonville office is located at 1703 Phyllis St. and owned by Lindsey-Green Commercial Properties of Fayetteville.