SEC gave Horne lifetime trading ban

Tom Horne (file photo)

The U.S. Securities and Exchange Commission imposed a lifetime trading ban on attorney general candidate Tom Horne in 1973 after finding that his investment company violated numerous federal regulations.

According to a 1973 SEC report, Horne and his company, T.C. Horne & Co., “violated the recordkeeping, antifraud and broke-deal net capital provisions of the federal securities laws, and filed false financial reports with the commission.” Later that year, the SEC barred Horne from association with any broker, dealer, investment advisor or registered investment company.

Horne, the state Superintendent of Public Instruction, also falsely stated in several annual reports to the Arizona Corporation Commission that he had never been a partner in a corporation that filed for bankruptcy, though T.C. Horne & Co. went bankrupt in 1970. Horne failed to disclose the bankruptcy in annual reports for his law firms in 1997-2000 and 2002.

Horne said the SEC ban was the result of computer errors, and computers had only recently come into regular use by accounting firms at the time and were not as reliable as they are today.

“The use of the computers was resulting in inaccurate financial data,” Horne said.

And the false statements on his prior bankruptcy were due to errors on routine paperwork, Horne said.

According to an August 1970 SEC report, Horne submitted inaccurate records and false reports for his company, and attempted to induce the purchase and sale of securities, though his company did not have the capital necessary for the transactions. Without admitting or denying the allegations, Horne consented to the SEC’s filings, and did not oppose the SEC’s sanctions, the report said.

Horne founded T.C. Horne & Co. in Cambridge, Mass., while he was an undergraduate student at Harvard. The company also had branch offices in New York, Washington, D.C., and Louisville, Ky.

The first televised debate between Horne and former Maricopa County Attorney Andrew Thomas, his rival for the Republican nomination in the attorney general’s race, is scheduled for June 22, and Horne’s past financial issues will likely stoke the flames of an already brutal primary. A May debate between the two largely consisted of Horne attacking Thomas over alleged ethical malfeasance and Thomas counterpunching over Horne’s past life as a Democrat.

Ethics have been a prominent theme in the GOP primary for attorney general, and Horne has focused heavily on allegations that Thomas launched politically motivated prosecutions to settle vendettas against his enemies. But the revelations about Horne’s past open him up to attacks on his ethics as well, and Thomas’s campaign was quick to take advantage of the issues.

“This is the guy we’re going to ask to take on white collar fraud in this state, to take on bad bankers?” asked Thomas spokesman Jason Rose. “These aren’t allegations. These are facts. And the guy has disqualified himself from being attorney general.”

“We’re talking about something here that’s 40 years old. Thomas is trying to distract attention from the fact that he’s under investigation by the FBI, could be indicted by a federal grand jury and is under investigation by the State Bar and may lose his license to practice law. And all of that from events of this past year,” Horne said.

Thomas called on Attorney General Terry Goddard to investigate Horne’s non-disclosure on his Corporation Commission reports. The Attorney General’s Office said it had no comment on the matter.

Pollster Bruce Merrill, who runs the Cronkite/Eight poll, said the SEC trading ban will probably hurt Horne’s campaign by nullifying his biggest advantage over Thomas. And since few voters pay attention to down-ballot races, Merrill said, the ethical issues may be the only things they know about Horne and Thomas.

“There’s no question, because it offsets the ethical advantage, or perceived advantage, that he had over Thomas,” Merrill said. “While we don’t know enough yet about all the factors to know what it does, the one thing we do know is it’s going to hurt Horne pretty bad.”

The issue also gives the eventual Democratic nominee for attorney general a guarantee that he or she will run against a Republican with alleged ethical baggage.

“You have people who have had legal entanglements or investigations or troubles that raise questions about how they’ll be able to handle the job of attorney general,” said Democratic lobbyist David Waid. “If you’re one of our potential nominees and you’re looking at these two guys, you’re looking at the horn o’plenty.”