Update: Feds say Newport broker invented $1 billion client
3:43 PM Mon, Mar 09, 2009 | Permalink
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PROVIDENCE -- The U.S. Securities and Exchange Commission today charged a Rhode Island woman with making up a $1 billion client to attract real clients to her money managing company. The commission filed suit in U.S. District Court against Leila Jenkins and her firm, Locke Capital Management, seeking return of ill-gotten gains and fines against her and the company. The SEC alleges that Jenkins told clients that she had as much as $1.6 billion under management when, in fact, the agency says, her total never exceeded $165 million. Jenkins' lawyer, Ned Searby of Cleveland, said this afternoon, "To our understanding, there is no issue that any client assets are missing or have been misappropriated. In fact, Locke has outperformed for its clients during the recent remarkable decline in the markets. The main thrust of the SEC's complaint, as we understand it, is that Locke has made misrepresentations in certain marketing materials to prospective clients. Locke intends to contest the allegations in court." He declined to discuss the case further. After inventing a "Swiss Private Bank" as a client, the SEC says, Jenkins attracted two foreign banks, which are not identified in the lawsuit, as clients. The SEC alleges that Jenkins fabricated regulatory filings and client brochures that showed investments under her direction returned more than they actually had, including showing returns for several years when she had no clients. The suit does not allege that any client money is missing. Part of Jenkins' undoing was the use of a free Hotmail e-mail account, according to the SEC. The lawsuit says she told regulators that she used the Hotmail account to communicate with the Swiss Private Bank. But, the SEC says, messages supposedly sent from Switzerland were actually sent from someone logged in in New York, a city in which Jenkins had an office. In 1983, while a resident of Darien, Conn., Jenkins married a lawyer, Edward J. Waite III. They later divorced and she married a Brit, Malcolm Ian Sinclair, the 20th Earl of Caithness. Their marriage took place at Scotland's historic Rosslyn Chapel, a site familiar to fans of the Da Vinci Code. The Earl filed for divorce a year later. Jenkins is a member of the Board of Trustees of the Preservation Society of Newport County. Phone records show her at 25 Walnut St., Newport, and at 227 Australian Ave., Palm Beach, Fla. Phone messages from a reporter left at both locations have not been returned. 
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