In recent enforcement actions, an advisor on the lam who defrauded clients of nearly $40 million had his assets frozen by the SEC, and FINRA fined and censured a firm over the way it handled UIT transactions for more than two years.
Also, FINRA launched a pilot program for large arbitration cases.
FBI Hunts Fugitive Advisor in $40 Million Fraud
Aubrey Lee Price, a Georgia-based investment advisor, is the target of a manhunt by the FBI on accusations that he defrauded his clients of almost $40 million in sales of an unregistered investment fund he managed.
Price apparently went into hiding, according to the SEC, which alleges that he raised money from more than 100 investors living primarily in Georgia and Florida by selling shares in the fund, PFG. Price claimed to invest fund assets in traditional marketable securities, according to the allegations, but also made illiquid investments in South American real estate and a troubled South Georgia bank.
As his losses grew, he made up phony account statements with fictitious balances and returns that he pawned off on investors and bank regulators to hide what he had done.
The SEC alleges that the scheme began in 2008, and that according to PFG’s private placement memorandum, the investment objective was to achieve “positive total returns with low volatility” by investing in a variety of opportunities, including equity securities traded on the U.S. markets.
While approximately $36.9 million in PFG investor money was placed in a securities trading account at a broker-dealer, the account suffered massive trading losses and money was frequently wired to PFG’s operating bank account. Throughout the time during which PFG suffered trading losses, Price prepared client accuont statements indicating fictitious amounts of assets and investment returns, according to the SEC.
According to the SEC’s complaint filed in U.S. District Court for the Northern District of Georgia, Price, believed to be a resident of Lowndes County in Georgia after moving from Manatee County, Fla., sent a 22-page letter to some individuals dated June 2012, titled “Confidential Confession For Regulators—PFG, LLC and PFGBI, LLC Summary.” In the letter, Price admits that he “falsified statements with false returns” in order to conceal between $20 million and $23 million in investor losses.
William P. Hicks, associate director of the SEC’s Atlanta regional office, said in a statement, “Price raised nearly $40 million from investors and made woeful financial transactions that he hid from them. Now both the money and Price are missing.”
Price’s assets have been frozen, and anyone with information about Price’s whereabouts is asked to contact the Atlanta office of the FBI at 404-679-9000 or the Lowndes County Sheriff’s Office at 229-671-2985.
UVEST Fined, Censured in UIT Sales