SEC ALLEGES FIRM RAN PONZI SCHEME.

Byline: JOHN P. MCDERMOTT

Market watchdog agency files suit

against Columbia-based broker

Federal regulators have sued a Columbia-based brokerage firm, alleging the company ran a fraudulent investment scheme that raised at least $25 million, primarily from its Summerville office, and kept more than $9 million for itself and an affiliated business.

The U.S. Securities and Exchange Commission said it obtained a temporary restraining order against Southern Financial Group Inc. and several other defendants Friday. The action freezes their assets and prohibits the destruction of any pertinent documents. Meanwhile, the company's retail accounts in South Carolina apparently have been turned over to another firm and probably are safe, according to the state Attorney General's office.

Among other parties, the SEC named Southern Financial's two top officers in its complaint: Richard M. Wooten, 43, of Columbia, president and chief financial officer; and Charles Dennis McKittrick, 53, of Summerville, chairman and chief executive. The executives did not return messages left at their homes and offices Friday.

The commission is seeking to recover money from what it alleged was a classic "Ponzi scheme," in which funds from new investors are used to pay off earlier investors. Named after notorious Depression-era swindler Charles K. Ponzi, the scams collapse when organizers fail to raise fresh funds. SEC senior attorney Alex Rue declined to comment on the case, saying the lawsuit is self-explanatory.