SEC Charges First Liberty Building & Loan With Ponzi Defrauding Approx. 300 Investors of $140 Million

SEC Charges Georgia-based First Liberty Building & Loan and its Owner for Operating a $140 Million Ponzi Scheme

The Securities and Exchange Commission today announced that it filed charges seeking an asset freeze and other emergency relief against Newnan, Georgia-based First Liberty Building & Loan, LLC and its founder and owner Edwin Brant Frost IV in connection with a Ponzi scheme that defrauded approximately 300 investors of at least $140 million.

According to the SEC’s complaint, from approximately 2014 through June 2025, First Liberty and Frost offered and sold to retail investors promissory notes and loan participation agreements that offered returns of up to 18% by representing that investor funds would be used to make short-term bridge loans to businesses at relatively high interest rates. The defendants allegedly told investors that very few of these loans had defaulted and that they would be repaid by borrowers via Small Business Administration or other commercial loans. The complaint also alleges that, while some investor funds were used to make bridge loans, those loans did not perform as represented, and most loans ultimately defaulted and ceased making interest payments. Since at least 2021, First Liberty operated as a Ponzi scheme by using new investor funds to make principal and interest payments to existing investors, according to the complaint. The complaint further alleges that Frost misappropriated investor funds for personal use, including by using investor funds to make over $2.4 million in credit card payments, paying more than $335,000 to a rare coin dealer, and spending $230,000 on family vacations.

HNTRBRK

We have talked about Hunterbrook — the hedge fund that’s also a newspaper — a lot, and one thing that I have said is that, if you are in the business of finding problems at public companies, you should really try to monetize that every way you can. The classic approach is “find bad companies and sell their stocks short,” but there are other approaches that are (1) maybe better and (2) certainly additive. “Find bad companies, sell their stocks short, sue them for securities fraud and file a whistleblower complaint with the US Securities and Exchange Commission” is strictly better than only doing one thing. Hunterbrook is using every part of the bad companies; the Financial Times reports:

“Hunterbrook also revealed to investors in a letter that it planned to further exploit its news gathering by launching a litigation business that would partner with law firms on cases enabled by the newsroom’s reporting.”

Sidley Sees Summer Burst Defending Companies From Investors

Investors who spent their spring buying discounted stocks are fueling a summer surge of activity at Sidley Austin, the top defender of companies facing shareholder activism.

Kai Liekefett, co-chair of Sidley’s shareholder activism and corporate defense practice, said eight companies have hired him in the past couple of weeks alone. This kind of summer activity is unusual even for Sidley—which has been the No. 1 law firm enlisted to fend off activist shareholders for the last three years.

Sidley had 32 engagements in the year’s first half, besting Latham & Watkins and Skadden, Arps, Slate, Meagher & Flom, according to new Bloomberg data that provides an early look at shareholder activism this year. The rankings show Latham and Skadden both moved up from the end of 2024 with increasing work, while shareholder activism waned overall in the first half of 2025.

UK to End Paper Shares After 400 Years to Boost City’s Appeal

The UK will scrap paper stock certificates to cut costs for companies, as Chancellor of the Exchequer Rachel Reeves seeks to fully digitize Britain’s capital markets in a bid to boost the competitiveness of the City.

The ending of paper shares, an idea long called for by many FTSE 100 companies because of the administrative cost of issuing physical certificates and maintaining separate paper-based share registers, is due to be announced by Reeves at her Mansion House speech on Tuesday, according to people familiar with the matter, speaking on condition of anonymity.