SEC charges Texas attorney general with securities fraud

SEC charges Texas attorney general with securities fraud
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The Securities and Exchange Commission on Monday charged Texas’s top law enforcement official with civil securities fraud for allegedly deceiving investors in a computer company.

Texas Attorney General Ken Paxton (R) received 100,000 shares of Servergy, a Nevada-based technology company, to pitch investors on a server it was selling between 2011 and 2013, according to the SEC complaint. Servergy officials allegedly marketed the server with incorrect information, and Paxton allegedly did not disclose to investors that he would be paid a commission.

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“Paxton knowingly or recklessly failed to inform the individuals he recruited that he was being compensated to promote Servergy to investors,” says the agency's complaint. “While Paxton possessed no technical expertise and did not know whether any of Servergy's claims were true, he conducted no due diligence to confirm, clarify, or correct Servergy's claims.”

Paxton, elected in 2014, is also facing state criminal charges over his role with Servergy.

"Mr. Paxton vehemently denies the allegations in the civil lawsuit and looks forward not only to all of the facts coming out, but also to establishing his innocence in both the civil and criminal matters," said Bill Mateja, Paxton's lawyer in a statement Monday.

This story was updated at 3:22 p.m.