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May 18, 2012 at 05:40 AM
The Securities and Exchange Commission on Thursday charged Mark Spangler, a former chairman of the National Association of Personal Financial Advisors (NAPFA), with defrauding clients by secretly investing their money in two risky startup companies he co-founded.
The SEC alleges that the Seattle-based advisor and his firm funneled approximately $47.7 million of client money into these private ventures despite representing that he would invest primarily in publicly traded securities. Such risky investments were inconsistent with the investment strategies that Spangler promised his clients and contrary to their investment objectives.
Spangler served as chairman and CEO of one of the companies, which is now bankrupt, the SEC says. He was chairman of NAPFA in the late 90s.
The U.S. Attorney’s Office for the Western District of Washington as well as the FBI announced parallel criminal charges against Spangler. Spangler’s inactive membership in NAPFA was suspended in October of 2011 when the FBI investigation was launched.
NAPFA released a comment on Friday stating that the alleged actions committed by Spangler are “severe” and “have been deeply concerning” and the association “strongly condemns the actions contained in the FBI indictment and SEC complaint and any behavior that violates the public trust.”
NAPFA went on to say that while organizations like NAPFA exist to set standards that promote ethical behavior, ”in any organization there are members or former members who act in unethical ways. NAPFA takes all complaints against its members seriously and has taken appropriate actions.”
Susan John, the current chairwoman of NAPFA, told The New York Times in October, “He was perhaps one of the strongest believers in standards for NAPFA. So it’s very difficult for me to see how he could have evolved into the person that these allegations would lead you to believe he had become.”
