UNITED STATES SECURITIES AND EXCHANGE COMMISSION

SEC ADMIN RELEASE 34-75644/AUGUST 7, 2015: THE SECURITIES AND EXCHANGE COMMISSION (COMMISSION) DEEMS IT APPROPRIATE AND IN THE PUBLIC INTEREST THAT PUBLIC ADMINISTRATIVE PROCEEDINGS BE, AND HEREBY ARE, INSTITUTED PURSUANT TO SECTION 15(B) OF THE SECURITIES EXCHANGE ACT OF 1934 (EXCHANGE ACT) AND SECTION 203(F) OF THE INVESTMENT ADVISERS ACT OF 1940 (ADVISERS ACT) AGAINST JOHN THORNES. ON JULY 21, 2015, A FINAL JUDGMENT WAS ENTERED BY CONSENT AGAINST THORNES, PERMANENTLY ENJOINING HIM FROM FUTURE VIOLATIONS OF SECTION 17(A) OF THE SECURITIES ACT OF 1933, AND SECTION 10(B) OF THE EXCHANGE ACT AND RULE 10B-5 THEREUNDER IN THE CIVIL ACTION ENTITLED SECURITIES AND EXCHANGE COMMISSION V. JOHN THORNES, CIVIL ACTION NUMBER 5:14-CV-01598-RGK-SP(X) IN THE UNITED STATES DISTRICT COURT FOR THE CENTRAL DISTRICT OF CALIFORNIA.

Order

Bar (Permanent)

SEE COMMENTS

Indefinite

8/7/2015

PARTICIPATING IN ANY OFFERING OF A PENNY STOCK

Indefinite

8/7/2015

FINRA

RESPONDENT THORNES FAILED TO COMPLY WITH AN ARBITRATION AWARD OR SETTLEMENT AGREEMENT OR TO SATISFACTORILY RESPOND TO A FINRA REQUEST TO PROVIDE INFORMATION CONCERNING THE STATUS OF COMPLIANCE.

LETTER

Suspension

ANY CAPACITY

N/A

5/4/2015

PURSUANT TO ARTICLE VI, SECTION 3 OF FINRA BY-LAWS, AND FINRA RULE 9554, RESPONDENT THORNES IS SUSPENDED ON MAY 4, 2015 FOR FAILURE TO COMPLY WITH AN ARBITRATION AWARD OR SETTLEMENT AGREEMENT OR TO SATISFACTORILY RESPOND TO A FINRA REQUEST TO PROVIDE INFORMATION CONCERNING THE STATUS OF COMPLIANCE.

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

SEC LITIGATION RELEASE 23058, AUGUST 4, 2014: THE SECURITIES AND EXCHANGE COMMISSION TODAY CHARGED A CALIFORNIA-BASED BROKER WITH STEALING $4.4 MILLION FROM TWO TRUST BROKERAGE ACCOUNTS AT HIS FIRM AND DIVERTING IT TO A PAIR OF FRIENDS FOR USES RANGING FROM GAMBLING TO CHARTERING A PRIVATE JET. THE SEC ALLEGES THAT JOHN T. THORNES OF REDLANDS, CALIF., DIVERTED FUNDS OUT OF A BROKERAGE ACCOUNT FOR A TRUST ESTABLISHED FOR THE HEALTH AND WELFARE OF AN 80-YEAR-OLD DEMENTIA PATIENT WHO HAS BEEN LIVING AT HOME FOR SEVERAL YEARS WITH 24-HOUR NURSE CARE. THORNES ALSO SIPHONED MONEY OUT OF A BROKERAGE ACCOUNT FOR A TRUST SET UP TO FUND COLLEGE SCHOLARSHIPS FOR LOCAL HIGH SCHOOL GRADUATES. ACCORDING TO THE SEC'S COMPLAINT FILED IN U.S. DISTRICT COURT FOR THE CENTRAL DISTRICT OF CALIFORNIA, THORNES STOLE MONEY FROM THE TWO ACCOUNTS PRIMARILY TO BENEFIT TWO OF HIS FRIENDS. THORNES HAS TRIED TO PASS OFF THE PAYOUTS AS LOANS, HOWEVER THERE WERE NO LOAN DOCUMENTS, NO STATED INTEREST, AND NO COLLATERAL FOR THE FUNDS GIVEN. NONE OF THE MONEY WAS EVER REPAID. THE SEC ALLEGES THAT THORNES DECEIVED HIS OWN MOTHER WITH RESPECT TO THE EDUCATIONAL TRUST. SHE SERVED AS TRUSTEE, AND HE PERIODICALLY ASKED HER TO SIGN BLANK CHECKS THAT HE THEN USED IN HIS MISAPPROPRIATION SCHEME. THORNES NEVER INFORMED HIS MOTHER ABOUT TRADES HE MADE, AND HE CONVERTED THE BROKERAGE ACCOUNT TO A MARGIN ACCOUNT EVEN THOUGH IT WAS DESIGNATED AS A LOW OR MINIMAL-RISK TOLERANCE ACCOUNT. HE USED THE MARGIN DEBT IN HIS SCHEME AND LATER SOLD SECURITIES FROM THOSE ACCOUNTS TO AVOID THE MARGIN CALLS. THORNES DID THE SAME THING WITH THE BROKERAGE ACCOUNT FOR THE ELDERLY DEMENTIA PATIENT. ACCORDING TO THE SEC'S COMPLAINT, AFTER THORNES LIBERALLY TRANSFERRED MONEY FROM THE BROKERAGE ACCOUNTS TO HIS FRIENDS, THEY USED IT TO CHARTER A PRIVATE JET, BUY A LUXURY CAR, AND PURCHASE A VACATION HOME. THORNES PAID HIS MOTHER ABOUT $84,000 IN EXCESS TRUSTEE FEES.

Judgment Rendered

Civil and Administrative Penalty(ies)/Fine(s)

Disgorgement

$4,366,790.00

Monetary Penalty other than Fines

Injunction

breach of fiduciary duty; wrongful taking, concealing or disposition of trust property in violation of Cal. Prob. Code §859; conversion; elder abuse; violation of California Corporate Securities Law of 1968; breach of contract; negligence; unjust enrichment

$1,701,443.90

The Award has not been paid.