Former isle
resident gives up
SEC license

The agency alleged
that the mutual-fund
operator committed fraud

By Rick Daysog
Star-Bulletin

A former Diamond Head resident has relinquished his license as an investment adviser after the Securities and Exchange Commission alleged he committed fraud and made "numerous misrepresentations to shareholders."

John Bagwell, who served as chief executive officer of the now-defunct JWB Aggressive Growth Fund, also agreed to pay a $10,000 fine without admitting or denying the SEC charges.

Bagwell operated the fund from March 1996 to April 1999, when he liquidated the mutual fund after state regulators opened a separate investigation. At one time, the JWB fund boasted 60 investors and net assets of $456,000.

Bagwell, who has relocated to the mainland, could not be located for comment. His Texas-based attorney David Jones also could not be reached.

Bagwell defrauded investors at the end of 1998 when he ran up more than $83,000 in management and administrative fees, or about 25 percent of the mutual fund's net asset value, the SEC said.

Bagwell had previously told shareholders that the fund's administration costs would not exceed 2.35 percent of its net asset value and that he would reimburse investors for any amounts above that, the SEC said.

Bagwell failed to reimburse the mutual fund before it was liquidated in 1999 but the SEC said that JWB's investors eventually received all of their money back.

"Bagwell failed to timely and fully reimburse the fund for expenses above the expense cap," the commission said. "As a result, he unlawfully borrowed up to 25 percent of the fund's net assets."

The SEC action comes after Bagwell gave up his state license as an investment adviser in January 2000. At the time, the state Securities Enforcement Division alleged that Bagwell failed to renew the registration of JWB's shares with the state.

The state regulators also alleged that Bagwell failed to keep adequate records as required by Hawaii law.