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SEC nabs advisors in Georgia, Michigan

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The SEC has levied a fine and cease-and-desist order against a Detroit financial advisor. The agency claims the advisor defrauded two senior clients out of more than $300,000. According to authorities, the advisor allegedly convinced two elderly clients to purchase a $250,000 Guaranteed Investment Certificate (GIC) from a major Canadian bank. The advisor claimed the certificate, which was to pay 15 percent in monthly interest payments over two years, was guaranteed. In reality, the certificate was phony and the advisor used the clients’ money to generate the interest payments and then used the remainder for personal expenses. The advisor must now pay the SEC a $465,000 fine, including interest and a civil penalty of $150,000. He is also permanently barred from the securities business.

The SEC has charged a Georgia financial advisor with stealing $2 million in client retirement accounts. Apparently, the advisor told six clients he planned to invest their money in fixed-income assets, variable annuities or common stock. But he never made the investments and instead withdrew the money for his own use. When confronted, the advisor falsely claimed his clearing firm was Goldman Sachs, which had no record of business dealings with him. The advisor is now facing a government restraining order, refund of client assets and civil penalties.

A father/son advisor team has been charged in connection with a $2 million stock-trading scheme that victimized their senior clientele. According to the SEC, they executed millions of dollars in securities trades over four years. When a trade was positive, they kept the gains for themselves; when it was negative, they allocated it to their clients. Over the period in question, the duo executed 13,500 securities purchases worth more than $350 million. As a result of their cherry-picking scheme, the father’s personal account increased in value by 25,000 percent while client accounts decreased in value. Authorities say the father used the illicit gains to make mortgage payments on a 6,500-square foot luxury home with equestrian facilities. He also bought luxury vehicles, a membership in a luxury vacation resort and foreign vacations. The son bought a slip for his boat and purchased trips to ski resorts and to Hawaii.

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